Van-Go Transport Co., Inc. v. New York City Bd. of Educ.

OPINION

Among other issues, this case raises an interesting and somewhat novel defamation question. In an age of increasingly efficient information collection, the case highlights the conflict between the justifiable goal of more efficient government and a person’s interest in his reputation, that “plant of tender growth, [whose] bloom, once lost, is not easily restored.” Karlin v. Culkin, 248 N.Y. 465, 478, 162 N.E. 487 (N.Y.1928) (Cardozo, C.J.). Specifically, the case presents the question whether, under New York State law, the traditional rule that consent to publication bars a defamation claim should be applied where to bid on government contracts a person must place defamatory material into New York City’s computerized procurement system. I conclude that the New York Court of Appeals would hold that an action for defamation should lie where a plaintiff has no *94 realistic alternative but to submit the defamatory material.

Plaintiffs are three corporations (Van-Go, Sterling Coach, and Celebrity Transit), all in the business of providing bus or van transportation, and Paul and Isaac Dachs, their two principals. Van-Go had a two year contract with the Board of Education (“BOE” or “Board”) from September 1988 that had repeatedly been extended through June 30, 1996, providing transportation for severely disabled pupils in vans with a driver and two escorts. This contract required Van-Go’s drivers to carry the pupils from their residences. See Compl. ¶¶ 14-15.

The events leading to this lawsuit apparently resulted from a labor dispute. In 1993, Van-Go was not organized by Local 1181— 1061, Amalgamated Transit Union, AFL-CIO (“Local 1181”), the primary union representing bus drivers for the BOE; instead, it paid lower wages and was organized by District 6 International Union of Industrial, Service, Transport and Health Employees (“District 6”), whose contract expired on March 31, 1994. See Compl. ¶25. In October or November 1993 paid organizers from Local 1181 began organizing Van-Go employees. See Compl. ¶ 26. At the same time, District 6 filed a still-unresolved unfair labor practices complaint against Van-Go, blocking any change in union representation. See Compl. ¶ 27.

In late January or early February 1994, the BOE’s Executive Director of Operational Support Services Kevin Gill placed Van-Go’s contract out for re-bid “in anticipation of the successful organization of Van-Go by Local 1181 and what seems to be an inevitable job action as a result.” Defs.’ Ex. D, undated Ltr. from Kevin Gill (“Gill Ltr.”). The letter states: “The President of Van-Go has informed us that he will not be able to pay the wages typically demanded by Local 1181 under the current terms of his Board contract.” Id.

The contract between Van-Go and the BOE also required that Van-Go’s employees be approved pursuant to a background check, mental fitness report, drug test, and training course. Plaintiffs assert that this process often took six months to a year. See Compl. ¶ 17. The contract between Van-Go and the BOE included a clause stating: “The Contractor must have sufficient, qualified and approved personnel to enable the Contractor to dispatch substitute escorts promptly if, when and where necessary to ensure continuous, uninterrupted and punctual service in each and every instance.” Defs.’ Ex. A “Extension and Second Amendment of Contract,” § (D) at 10. Plaintiffs allege that it was the BOE’s “uniform practice and policy to approve conditionally new employees.... ” Compl. ¶ 18. Plaintiffs state that the BOE has no policy limiting the number of conditional employee approvals, see Compl. ¶21, and had previously “certified conditionally drivers in excess of the number needed for regular service.... ” Compl. ¶ 23.

Van-Go learned that Local 1181 planned to initiate a strike against it around April 4, 1994; it notified the BOE by letter dated March 16, 1994. See Compl. ¶¶ 29-30. The BOE certified potential replacement workers as it had in the past. See Compl. ¶¶ 32-33. Plaintiffs allege that Local 1181 called off the strike because the BOE had conditionally certified replacement workers. See Compl. ¶ 35.

The complaint further alleges that Gill discussed Van-Go’s attempts to obtain replacement workers with representatives of Local 1181. See Compl. ¶ 37. Gill, on behalf of the BOE, informed Van-Go by letter dated April 7, 1994, that it would not conditionally approve employees “ ‘to act as strike breakers.... ’” Compl. ¶ 38. Plaintiffs contend that Gill’s act was a deviation from its longstanding practice of conditional certification, and that as a result, Van-Go was unable to obtain replacement employees. See Compl. ¶¶ 38-42. Gill’s action was appealable to the Chancellor, who acts through a Board of Review, which has the power to review Gill’s decision as well as contractor qualifications. See Defs.’s Mot., Aff. of Richard Langford, Deputy Dir. of Contractual and Regulatory Affairs dated Sept. 15, 1995 ¶¶ 9-13, 21-23. Van-Go did appeal to the Board of Review, but no hearing was ever held. See Compl. ¶ 45.

*95 Plaintiffs allege that Local 1181 initiated a strike against Van-Go on June 27, 1994, pursuant to an “arrangement” with the BOE whereby the BOE would refuse to certify conditional replacements and the union would not strike until a time that “would not interfere unduly with the school calendar.” Compl. ¶¶ 47-48. As a result of the strike, Van-Go was unable to perform under the contract and was defaulted by the Board of Review on June 30, 1994. See Defs.’ Ex. C., Ltr. to Gill from Arthur H. Avedon, Administrator dated July 1, 1994.

Subsequently, Celebrity and Sterling, the sister companies of Van-Go, submitted proposals for the Van-Go contract. Sterling was the apparent low bidder for contract number 7200, and Celebrity was the apparent low bidder for contract number 7291. See Defs.’ Ex. E, Ltr. from Gill to Paul Dachs dated July 27, 1994. In both cases, the BOE, acting through Gill, requested “written assurance and a plan” that would describe how the companies would fulfill their contracts given Van-Go’s labor problems. Compl. ¶¶ 55-58, Defs’s Ex. E. At the time the bids were submitted, Sterling had no employees. See Defs.’ Ex. H, Test, of Paul Dachs at Board of Review Hr’g November 9, 1994, at 5. Plaintiffs assert that this request was an additional requirement not in the bid materials, not ordinary practice, and that other contractors were not subjected to this requirement. See Compl. ¶ 57. By letter dated August 4,1994, Celebrity and Sterling provided a plan to Gill proposing that replacement workers be used in the event of a strike. See Compl. ¶ 59.

On August 23, 1994, the BOE informed Celebrity and Sterling that it was awarding the contracts to other contractors because their refusal to perform without conditional certification of workers constituted a “qualification [conditional submission] of the bid.” Compl. ¶ 60; Defs.’ Ex. F, Ltr. from Richard W. Scarpa, Acting Director of Purchasing to Paul Dachs dated August 23, 1994 (“Scarpa Ltr.”). This letter also stated that the BOE had received allegations of criminal activity, specifically, “the possibility of criminal activity constituting the offer of gratuities to government officials,” which provided another ground for refusal to award the bid. Scarpa Ltr. Plaintiffs allege that this statement was false, and made with knowledge of its falsity, or with reckless disregard for its accuracy. See Compl. ¶ 62.

Plaintiffs appealed to the Board of Review on August 29, 1994. See Compl. ¶ 64. On October 14, 1994, plaintiffs requested that the BOE produce the names of the persons who were the sources of the allegations concerning gratuities. The BOE refused to provide these names, but also stated that no testimony concerning gratuities would be permitted at the hearing. See Compl. ¶¶ 64-66; Defs.’ Ex. G. No testimony regarding the allegations was presented at the hearing; plaintiffs allege this lack of testimony was due to defendants’ knowledge that the accusations were false. The Board of Review, finding that Sterling and Celebrity submitted “qualified” bids, denied the appeal on November 23,1994, and issued a formal decision on April 26, 1995. See Compl. ¶¶ 67-69; Defs.’ Ex. H.

Plaintiffs further allege that the BOE’s acts were taken on behalf of Local 1181; that the false allegations regarding gratuities have been entered into the City’s procurement system, resulting in their reappearance for every City bid; that the Department of Transportation delayed in awarding a contract to Celebrity because of the allegations; and that the plaintiffs have had no opportunity to refute the allegations of gratuities. See Compl. ¶¶ 70-73.

Plaintiffs brought suit in this court on June 30, 1995. Their complaint alleged five causes of action. Two counts were brought under 42 U.S.C. § 1983, alleging violations of federal labor law and due process. 1 Plaintiffs also pled several state law claims: breach of contract, breach of duty of good faith and fair dealing, and defamation. Plaintiffs seek damages, a declaratory judgment and a permanent injunction.

*96 In 1995, the defendants moved to dismiss portions of the plaintiffs’ complaint for failure to state a claim. At a motion hearing on April 16, 1996, the City’s motion to dismiss was denied, and plaintiffs’ claims for contract and lost profits damages were limited to Van-Go Transport only, as a matter of law. Decision was reserved on the motion for dismissal of the defamation claims, and the defendants were directed to produce copies of the City’s computer vendor tracking system (“Vendex”) reports on plaintiffs. See 4/16/96 TV. at 52.

Because both parties submitted materials beyond the complaint the remaining part of the motion was converted into one for summary judgment. Upon notice to the parties of the conversion, and additional oral argument, this remaining portion of the motion was granted in part and denied in part on February 6, 1997. This opinion explains the reasons for that decision.

Count V of the complaint alleges that two defamatory statements were made. The complaint first alleges that

Richard W. Scarpa, on his own behalf and on behalf of Mr. Gill, the Board and the City, published one or more false statements disparaging the quality of the services provided by [plaintiffs] and impugning the integrity of [plaintiffs]. These statements include, but are not limited to, a letter dated August 23, 1994, making false allegations of “possible] ... criminal activity constituting the offer of gratuities to government officials.” Upon information and belief, these statements were published to Board employees and others, and were entered into the City’s computerized procurement system.

Compl. ¶ 107. This allegation is based on the Scarpa letter, which states in pertinent part:

Your letter clearly indicates neither Sterling Coach nor Celebrity is prepared to perform in the event of award unless the Office of Pupil Transportation changes its policy with regard to conditional certification of school bus drivers. As this requirement constitutes a qualification of the bid, we are rejecting both submissions in accordance with paragraph 7 of each bid document entitled, “RESPONSIVE BIDS.”

While this constitutes sufficient cause for rejection alone, we are also in receipt of allegations from former employees of Van-Go Transport which call into question the prior performance and integrity of the principals of Sterling Coach and Celebrity and indicate the possibility of criminal activity constituting the offer of gratuities to government officials. Therefore a second cause for rejection of the submissions of those two companies is based on those allegations and in accordance with paragraph 14 of each bid entitled, “ABILITY TO PERFORM.”

The second defamatory statement (“second claim”) is alleged to be contained in the Gill letter, which the complaint refers to as follows:

The Board, the City and Mr. Gill further defamed plaintiffs in an undated letter signed by Mr. Gill, sent in or about late January or early February 1994 to many or all of Van-Go’s competing contractors. In that letter, Mr. Gill stated that it was “inevitable” that Division 1181 would strike Van-Go, and that the job action would result in “disruption of service.” For this reason, the letter said, the Board was putting all of Van-Go’s Contract work out for re-bid to other contractors.

Compl. ¶ 109. The letter stated:

The school bus company currently providing this service is in the second year of a three year extension and provides excellent service to the children. Normally, we would have no reason to bid this work. However, there is a strong possibility that the company currently providing the service, Van-Go Transportation, will be organized by Local 1181 of the Amalgamated Transit Union. The wages paid under Local 1181 collective bargaining agreements with the other school bus companies under contract to the Board of Education are higher than those currently being paid by Van-Go and there is every reason to believe that, in the event the organization is successful, the same will be required of Van-Go. The President of Van-Go has informed us that he will not be able to pay *97 the wages typically demanded by Local 1181 under the current terms of his Board contract. Therefore, we are requesting bids for this work in anticipation of the successful organization of Van-Go by Local 1181 and what seems to be an inevitable job action as a result.

... It is our intention to be prepared for any disruption in service by having a plan in place to resume service as quickly as possible____

... The start date of the contract has been left open purposely because we do not know when or if the anticipated action will occur.

... Bidders should also be aware that in the event there is no job action, we do not intend to make an award.

The complaint alleges that “these statements falsely impugned the basic trustworthiness and integrity of plaintiffs business, and are libel per se.” Compl. ¶ 110. The complaint also alleges that the statements were made with actual malice, and that they “were wilful, intentional and wanton.” Compl. ¶ 111.

In support of them motion, defendants make several arguments. Defendants argue that the Gill letter is not defamatory, that the statements are true or substantially true, and that the communication is privileged. Defendants argue that the Scarpa letter is not defamatory when considered in context, that there was no publication of the letter’s contents, that the communication is qualifiedly privileged, and that plaintiffs failed to plead special damages.

Motion Conversion and Summary Judgment Standard

Although defendants moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), they submitted additional evidence in the form of letters, exhibits, affidavits, and a declaration. Plaintiffs submitted a declaration that incorporates by reference the statements in the complaint. The motion was converted, upon notice and an opportunity to be heard, into one for summary judgment. See Fed. R.Civ.P. 12(c); Kennedy v. Empire Blue Cross and Blue Shield, 989 F.2d 588, 592 (2d Cir.1993); In re G & A Books, Inc., 770 F.2d 288, 295 (2d Cir.1985).

On a motion for summary judgment, the moving party bears the burden of showing the absence of a genuine issue of material fact. See B.F. Goodrich v. Betkoski 99 F.3d 505, 521 (2d Cir.1996) (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970)). “[A]ll inferences from the underlying facts must be drawn in the non-movant’s favor.” B.F. Goodrich, 99 F.3d at 521 (citing Quaratino v. Tiffany & Co., 71 F.3d 58, 64 (2d Cir.1995)). The party seeking summary judgment bears the initial burden of informing the court of the basis for its motion, and identifying the materials submitted that demonstrate the absence of a genuine issue of material fact. See Cubby, Inc. v. CompuServe, Inc., 776 F.Supp. 135, 138 (S.D.N.Y.1991) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986)). In cases such as this, “where the moving party does not bear the ultimate burden of proof on an issue ... that party [can satisfy its] burden by ‘point[ing] to the absence of evidence to support an essential element of the non-moving party’s claim.’” J & J Sheet Metal Works, Inc. v. Picarazzi, 793 F.Supp. 1104, 1108 (N.D.N.Y.1992) (applying standard to defendant’s motion for summary judgment in defamation action) (quoting Brady v. Town of Colchester, 863 F.2d 205, 211 (2d Cir.1988)). Once the moving party has met its burden, “[t]he non-movant may defeat summary judgment only by producing specific facts showing that there is a genuine issue of material fact for trial.” Samuels v. Mockry, 77 F.3d 34, 35 (2d Cir.1996). The court’s function is to determine whether genuine issues of fact exist, not to decide them: “ ‘Its duty, in short, is confined at this point to issue-finding; it does not extend to issue-resolution.’ ” B.F. Goodrich, 99 F.3d at 522 (quoting Gallo v. Prudential Residential Svcs., 22 F.3d 1219, 1224 (2d Cir.1994)).

Defamation

Under New York law, a plaintiff seeking damages for libel must plead and prove four elements: (1) a defamatory state *98 ment of fact; 2 (2) about the plaintiff; (3) publication to a third party; (4) injury. See Weldy v. Piedmont Airlines, Inc., 985 F.2d 57, 61 (2d Cir.1993) (discussing slander requirements under New York law). Whether a statement is susceptible of a defamatory construction is a question of law. See Aronson v. Wiersma, 65 N.Y.2d 592, 593-94, 493 N.Y.S.2d 1006, 483 N.E.2d 1138 (N.Y.1985). In making this determination, the court is not to seek out a defamatory meaning:

The words must be construed in the context of the entire statement or publication as a whole, tested against the understanding of the average reader, and if not reasonably susceptible of a defamatory meaning, they are not actionable and cannot be made so by a strained or artificial construction.

Id. at 594, 493 N.Y.S.2d 1006, 483 N.E.2d 1138 (citations omitted). In Aronson, the court held that the expression of unhappiness with an employee’s performance was not libelous as a matter of law. See id. In James v. Gannett Co., 40 N.Y.2d 415, 419-20, 386 N.Y.S.2d 871, 353 N.E.2d 834 (N.Y.1976), the court found that the statement “Men is my business” was not defamatory, because in the context of the article about the plaintiff (a belly dancer), it was clear that her remark meant that men came to her show to see her dance and talk to her, and that it was not reasonable to infer from this statement that she was a prostitute. Conversely, in Carney v. Mem’l Hosp. and Nursing Home of Greene County, 64 N.Y.2d 770, 772, 485 N.Y.S.2d 984, 475 N.E.2d 451 (N.Y.1985) the court held that the statement that a hospital employee had been dismissed “for cause” was susceptible to a defamatory connotation, and, therefore, the question of whether it was in fact defamatory was a question for the jury.

Related to their contention that the statements are not defamatory, defendants also argue that the plaintiffs’ complaint is deficient because it does not plead special damages. Plaintiffs initially captioned this cause of action “trade libel.” In New York, trade libel is the disparagement of a business’s goods or services. It requires a showing of false, defamatory statements published to a third party, malice, and special damages. See Kirby v. Wildenstein, 784 F.Supp. 1112, 1115 (S.D.N.Y.1992). The gravamen of trade libel is revealed by its alternative name: product disparagement. See id. It does not protect the reputation of the business as such. See Ruder & Finn, Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 670-71, 439 N.Y.S.2d 858, 422 N.E.2d 518 (N.Y.1981). Here, the gist of the plaintiffs’ complaint is that the statements “falsely impugned the basic trustworthiness and integrity of [their] business....” Compl. ¶ 110. As a result, these claims do not sound in trade libel, but rather, in a claim for reputational injury to their business.

Reputational injury to a person’s business, or to a company, consists of a statement that either imputes some form of fraud or misconduct or a general unfitness, incapacity, or inability to perform one’s duties. See Liberman v. Gelstein, 80 N.Y.2d 429, 436, 590 N.Y.S.2d 857, 605 N.E.2d 344 (N.Y.1992) (holding that a statement that does not reflect upon a person’s competence in their role, rather than as a person, is not defamatory as to that person’s business); see also Carney, 64 N.Y.2d at 772, 485 N.Y.S.2d 984, 475 N.E.2d 451 (holding that a statement that might suggest plaintiff is incompetent has pled a valid libel cause of action). Thus, the statement need not subject a person or business to ridicule or similar contempt; however, the statement must impugn the plaintiff’s ability to perform his or her specific occupation. See Liberman, 80 N.Y.2d at 436, 590 N.Y.S.2d 857, 605 N.E.2d 344. Because a statement impugning the plaintiff’s business reputation is libel per se, special damages need not be pled. See Ruder & Finn, 52 N.Y.2d at 670, 439 N.Y.S.2d 858, 422 N.E.2d 518. A statement may be shown to be libelous per se by pleading extrinsic *99 facts that are “presumably known” to the readers of the statement. Hinsdale v. Orange County Publications, Inc., 17 N.Y.2d 284, 290, 270 N.Y.S.2d 592, 217 N.E.2d 650 (N.Y.1966). 3 A statement that alleges a single instance of mistake or other error is usually not libel per se. See November v. Time Inc., 13 N.Y.2d 175, 178, 244 N.Y.S.2d 309, 194 N.E.2d 126 (N.Y.1963). In John Langenbacher Co., Inc. v. Tolksdorf, 199 A.D.2d 64, 605 N.Y.S.2d 34 (2d Dep’t 1993), the court affirmed a decision that found that the former owner of a firm defamed the company when he told others in his field that his former company would suffer “financial problems, be operated by incompetents and would be unable to fulfil its commitments as to quality and time.” Id. at 64-65, 605 N.Y.S.2d 34. A statement that a company is insolvent is defamatory because it is a statement of a kind that “force[s] the assumption that business would be lost because of the publication.” Medina v. United Press Associations, 16 Misc.2d 876, 877, 185 N.Y.S.2d 366 (Sup.Ct.N.Y.Cty.1959).

Applying these precedents, the Gill letter is not defamatory as a matter of law. Plaintiffs allege that the statements are defamatory because they impugn the ability of the firm to perform. This claim fails for several reasons. First, the letter explicitly states that the defendants’ concern springs from the fact that Van-Go has informed the BOE that it cannot pay the higher wages “typically demanded by Local 1181 under the current terms of [the] contract.” Defs.’ Ex. D (emphasis added). Thus, the letter refers to a single issue, about a single contract. There is no indication that the BOE or Gill is suggesting that Van-Go is generally untrustworthy or incapable of performing its contracts. Had the letter simply stated that the plaintiffs cannot perform the contract if they must pay higher wages it would fall within the rule that a statement alleging a single mistake or error is not actionable. See November v. Time, Inc., 13 N.Y.2d 175, 178, 244 N.Y.S.2d 309, 194 N.E.2d 126 (N.Y.1963).

Additionally, the letter is not defamatory because taken as a whole it does not impugn plaintiffs’ business. The letter does state that because Local 1181 will succeed in its organization of Van-Go’s employees, there will be an “inevitable job action” and a possible “disruption of service.” Without more, the statement might well be susceptible of a defamatory meaning, at least at this stage in the proceedings. However, a statement must be judged in the context of the entire communication. See James v. Gannett Co., 40 N.Y.2d 415, 419-20, 386 N.Y.S.2d 871, 353 N.E.2d 834 (N.Y.1976). The same letter states: “The school bus company [Van-Go] currently providing this service ... provides excellent service to the children. Normally we would have no reason to bid this work.” Gill Ltr. The letter also states: “Bidders should also be aware that in the event there is no job action, we do not intend to make an award.” Id. The assertion by plaintiffs that these statements are defamatory is directly contradicted by the praise for Van-Go, coupled with the statement that if there is no action, then there will be no award of the contract. Taken in its worst light, the statements only imply that due to forces beyond Van-Go’s control it may be unable to fulfill its contract. This is not a libelous statement about plaintiffs’ business, however, because the basis for the statement is the act of an external factor over which Van-Go has no control: Local 1181. When read with the entire statement it is clear that no impugning of plaintiffs’ business is evident. Nor do any of the extrinsic facts pleaded in the complaint render the statements libelous, for even if all the facts pled in the complaint were known to the recipients of the Gill letter, its import would still be the same. Only a strained and highly implausible reading of the letter could permit a defamatory meaning to emerge, and so this statement is not defamatory as a matter of law.

The Scarpa letter presents several different issues. Unlike the Gill letter, the *100 Scarpa letter contains language that is undoubtedly capable of a libelous interpretation. “[T]he possibility of criminal activity constituting the offer of gratuities to government officials” is an allegation of a serious offense — bribery—made against the principals of Van-Go, and is actionable. See Liberman v. Gelstein, 80 N.Y.2d 429, 435, 590 N.Y.S.2d 857, 605 N.E.2d 344 (N.Y.1992) (holding that defendant’s statement that plaintiff has a “ ‘cop on the take ... ’ charges a serious crime — bribery” that is actionable).

Defendants argue that plaintiffs have suffered no damages, citing the fact that Celebrity has since been awarded a contract by the City. However, when the action is for libel per se, as it is here, the injury is presumed. See Ruder & Finn, Inc. v. Seaboard Sur. Co., 52 N.Y.2d 663, 670, 439 N.Y.S.2d 858, 422 N.E.2d 518 (N.Y.1981) (“Where a statement impugns the basic integrity or creditworthiness of a business, an action for defamation lies and injury is conclusively presumed.”) Plaintiffs need not plead special damages. See id.; see also Yesner v. Spinner, 765 F.Supp. 48, 52 (E.D.N.Y.1991) (“It has long been the law in New York that a defamatory statement that is a direct attack upon the business, trade or profession of the plaintiff is considered defamation ‘per se’, and therefore actionable without any proof of special damages.”) (citing eases). Presumed damages are not limited to “out-of-pocket loss but, rather, also include[ ] impairment of reputation and standing in the community, personal humiliation and mental anguish and suffering.” Wachs v. Winter, 569 F.Supp. 1438, 1446 (E.D.N.Y.1983) (citing Gertz v. Robert Welch, Inc., 418 U.S. 323, 350, 94 S.Ct. 2997, 3012, 41 L.Ed.2d 789 (1974) and holding that “where the language alleged is libelous per se, the plaintiff need not plead or prove special damages in order to recover them.”) (footnote and citation omitted). Even where the plaintiff can show no actual damages at all, a plaintiff who has otherwise shown defamation may recover at least nominal damages. See Meehan v. Snow, 494 F.Supp. 690, 695-96 (S.D.N.Y.1980), reversed on other grounds, 652 F.2d 274 (2d Cir.1981) (awarding compensatory damages to lawyer who had been slandered even though lawyer’s business increased after the defamatory statement); see also Buckley v. Littell, 539 F.2d 882 (2d Cir.1976) (awarding one dollar in compensatory damages).

Publication

The defendants also argue that the plaintiffs are barred from bringing a defamation action because the plaintiffs themselves placed the defamatory matter into the City’s Vendex system. Put differently, they argue that the plaintiffs’ compliance with the City’s bidding requirements should be construed as a consent to the publication, barring their claim. Because this defense raised the novel issue of compelled self publication, the parties were asked to discuss publication by means of reproduction in the City’s Vendex system.

A business must submit a Vendex questionnaire when it submits a bid for a contract for more than $100,000.00, or for a bid of more than $10,000.00 awarded through a sole source procedure, or when the aggregate business of the contractor totaled more than $100,000.00 for the prior year, or if the entity wishes to be placed on a prequalified list. See “A Vendor’s Guide to Vendex” (“Guide”) at 1, attached to Ltr. to court from Susan Shapiro, Esq. counsel for defendants dated May 2, 1996 (“Shapiro Ltr.”); 9 R.C.N.Y. § 5-02.

Persons wishing to contract with the City are instructed to list on the Vendex questionnaire all incidents of contract denials, suspensions, terminations, rejections and the basis for those actions. See Business Entity Questionnaire (“BEQ”) Question 12, attached to Shapiro Ltr. Additionally, the questionnaire requires information on criminal and civil investigations within a five year period. Significantly, the Guide states that when answering Question 17, “if you suspect that the submitting business, its principal owners and officers and/or its affiliates were the subject of an investigation but are unsure, answer ‘Yes’ and attach an explanation of the reasons for your suspicion(s).” Guide at 8. The Guide further states that a statement that is materially false and fraudulently or willfully made “in connection with this questionnaire *101 may result in rendering the business submitting the questionnaire non responsible [sic] with respect to the present bid or future bids, and in addition, may subject the person making the false statement to criminal charges.” Guide at 9. Persons answering ‘Tes” to questions about contract incidents or investigations must fully explain their answers.

The forms for Celebrity and both Dachs listed the reason for denial of Celebrity’s contract as “qualified bid and unsubstantiated allegation of offering gratuity to inspector.” “Principal Questionnaire” for Paul Dachs (“Dachs PQ”) at 7, attached to Shapiro Ltr. Printouts of the information displayed on the Vendex program computer screens for plaintiffs indicate that this information appeared in data files on all of the plaintiffs, but in modified form. Despite the statement by the Board of Review that the bribery allegation would not be considered at the hearing, and presumably would not be at issue, the Vendex system lists “bribery” as the reason for the denial of the bid, and a comments field displays the language plaintiffs used: “qualified bid and allegation of offering grat[uity].” Vendex VDMXQ802, attached to Shapiro Ltr.

Defendants make several arguments regarding Vendex publication. First, they assert that the Vendex notices are not punitive because the purpose