The opinion of the court was delivered by: Judge Christine M. Arguello
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS PLAINTIFFS' AMENDED COMPLAINT
This matter is before the Court on Defendants' Motion to Dismiss Amended Complaint (Doc. # 49). The case involves an NBC Dateline program concerning questionable practices of insurance annuity salesmen.
Plaintiff Broker's Choice of America, Inc. ("BCA") operates as an Independent Marketing Organization ("IMO") in the insurance industry. (Doc. # 39 at ¶ 17.) IMOs enter into agreements with insurance companies to market their insurance products. IMOs then recruit and make these insurance products available to independent licensed insurance agents who, in turn, market these products to consumers.(Id.) BCA was founded by Plaintiff Tyrone M. Clark ("Clark"). During the relevant period, Clark was the majority owner of BCA and served as BCA's CEO. (Id., ¶ 18.)
Defendant NBC Universal ("NBCU") produced a television report ("Report") broadcast on Dateline NBC ("Dateline"), which focused on the predatory sales tactics used in the sale of equity-indexed annuities ("EIAs") to senior citizens. (Doc. # 49 at 9.) The Report included a segment about training sessions for insurance agents marketed by BCA under the name Annuity University ("AU"). (Doc. # 39 at ¶ 20.) AU is a two-day training session BCA offers to insurance agents on the sale of annuities. (Id., ¶ 24.) AU seminars are taught by Clark in Centennial, Colorado, in a building owned by a Clark-owned company and leased exclusively to BCA. (Id., ¶ 21.) In order to register with BCA for an AU seminar, participants must be licensed insurance agents, i.e., AU seminars are not open to the general public. (Id., ¶ 22, 79.)
Dateline is a weekly television broadcast produced by NBCU and broadcast on NBC affiliated television stations. (Id., ¶ 31.) In 2007, Dateline began an investigation into the tactics used by insurance agents selling EIAs to senior citizens. (Doc. # 49 at 12.) Defendant Chris Hansen headed the investigation. (Id.) As part of its investigation, Dateline arranged for volunteers in Arizona and Alabama to pose as potential customers of insurance agents. These volunteers were equipped with hidden cameras to record the agents' sales pitches. (Doc. # 39, ¶ 52.) During the sales pitches, the insurance agents failed to disclose the risks associated with EIAs, including the substantial penalties for withdrawing the funds before their maturity dates. (Id., ¶ 76.)
Because annuities are insurance products and the return on fixed-indexed annuities is tied to various securities indexes, the Alabama Department of Insurance ("ALDOI") and the Alabama Securities Commission ("ASC") were interested in regulating the sale and marketing of fixed-indexed annuities. (Id., ¶ 47.) ALDOI and ASC formed a joint task force with the Alabama Attorney General's Office ("AAG's office") with the intent to "work together in investigating and prosecuting improper annuities sales practices." (Id., ¶ 48.) The joint task force was named the Alabama Annuities Task Force ("AATF"). (Id., ¶ 49.) The purpose of the AATF was to "work jointly on investigations of annuity sales, particularly as they apply to the suitability of the products sold to Alabama consumers." (Id., ¶ 50.) Subsequently, AATF and Dateline investigated whether misleading, abusive, and criminal annuity sales practices were being conducted in Alabama. (Id., ¶¶ 51-52.) Dateline and the AATF officials decided their investigation should include the training of insurance agents in marketing annuities. (Id., ¶ 53.)
B. THE DATELINE INVESTIGATION
In October of 2007, Dateline producers Steven Fox Eckert and Marie Theresa Amorbieta registered for a two-day session at AU held on October 25 and 26, 2007.
(Doc. # 39, ¶ 58.) ALDOI issued Alabama insurance producer licenses to Eckert and Amorebieta with the agreement that they not sell insurance products with these licenses and that they return the licenses immediately after surveilling and gathering evidence about the AU class. (Id., ¶ 57.) BCA checked the licensing status of Eckert and Amorebieta and admitted them to the BCA premises to attend AU. (Id., ¶ 59.) Eckert and Amorbieta attended and recorded the classes. Some of the recorded footage was included within the Report which aired on April 13, 2008. (Id., ¶¶ 60-61, 72.)
Plaintiffs initiated this action on March 31, 2009. (Doc. # 1.) In their original Complaint, Plaintiffs asserted the following claims against Defendants: defamation, trespass, fraud, intrusion, and violation of 42 U.S.C. § 1983. On June 1, 2009, Defendants filed a Motion to Dismiss for failure to state claims upon which relief could be granted. (Doc. # 10.) On October 22, 2009, the Court granted the Motion to Dismiss, without prejudice. (Doc. # 38.) On November 20, 2009, Plaintiffs filed an Amended Complaint and Jury Demand. (Doc. # 39.) The primary differences between the factual allegations in the original Complaint and those in the Amended Complaint are that the Amended Complaint includes statements from a sales training seminar in March 2007 (the "March 2007 Seminar") and Plaintiffs' original claims for trespass, fraud and intrusion are no longer alleged, i.e., Plaintiffs now alleges only two claims for relief -- defamation and violation of 42 U.S.C. § 1983. For purposes of this order, the Court assumes, as asserted by Plaintiffs, that the March 2007 Seminar "includes discussions of the same topics presented at all Annuity University classes," including the October 2007 Seminar covered in the Report, and that it "provides in substance the true context of the snippets selected by Dateline . . . . " (Doc. # 39, ¶ 65).
On December 22, 2009, Defendants filed a Motion to Dismiss the Amended Complaint, again asserting that Plaintiffs failed to state claims upon which relief can be granted. (Doc. # 49.) On January 21, 2010, Plaintiffs filed an Amended Brief in Opposition to Defendants' Motion to Dismiss the Amended Complaint. (Doc. # 61.) On February 5, 2010, Defendants filed a Response to Plaintiffs' Amended Brief. (Doc. # 64.)
A court reviewing the sufficiency of a complaint assumes the truth of all well pleaded facts in the complaint, and draws all reasonable inferences therefrom in the light most favorable to the plaintiffs. Teigen v. Renfrow, 511 F.3d 1072, 1078 (10th Cir. 2007). In order to defeat a motion to dismiss under Rule 12(b)(6), Plaintiffs must demonstrate that the Amended Complaint alleges "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 547 (2007); see also Ashcroft v. Iqbal, 129 S. Ct. 1937, 1960 (2009). Plaintiffs need not prove their case at this point; rather, they need only allege a plausible claim for relief. Their "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.
Plaintiffs assert two claims in their Amended Complaint: (1) defamation, based on clips of the October 2007 Seminar that were used out of context; and (2) violation of 42 U.S.C. § 1983, grounded in the theory that Dateline's partnership with the state of Alabama transformed Dateline into a state actor.
The tort of defamation exists to redress and compensate individuals who have suffered serious harm to their reputations due to the careless or malicious communications of others. Milkovich v. Lorain J. Co., 497 U.S. 1, 11 (1990); Keohane v. Stewart, 882 P.2d 1293, 1297 (Colo. 1994). A claim for defamation requires that the plaintiff prove, by a preponderance of the evidence, that the defendant published a defamatory statement. If a public figure or a matter of public concern is involved, a heightened burden applies and plaintiff is required to prove a statement's falsity by clear and convincing evidence rather than a preponderance. See Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 775 (1986); Smiley's Too, Inc. v. Denver Post Corp., 935 P.2d 39, 41 (Colo. App. 1996). This heightened burden requires a plaintiff to demonstrate that the statements were made with actual malice, i.e., with knowledge that the statements were false or made with reckless disregard as to their truth or falsity. New York Times v. Sullivan, 376 U.S. 254, 285-86 (1964); see also Lockett v. Garrett, 1 P.3d 206, 210 (Colo. App. 1997). Actual malice can be shown if the defendant entertained serious doubts as to the truth of the statement or acted with a high degree of awareness of its probable falsity. Lewis v. McGraw-Hill Broad. Co., 832 P.2d 1118, 1123 (Colo. App. 1992). Under Colorado law, absolute truth is not required. Instead, a defendant need only show substantial truth, i.e., that "the substance, the gist, the sting of the matter is true." Gomba v. McLaughlin, 180 Colo. 232, 236 (Colo. 1972).
The Court previously held that the Dateline Report was an issue of public concern. It dismissed Plaintiffs' defamation claim because Plaintiffs failed to provide "non-conclusory factual allegations to support their claim for relief," and failed to allege sufficient facts demonstrating that Clark's statements in Defendants' Report were taken out of context and presented in a false light. (Doc. # 38 at 3-6.)
In the Amended Complaint, Plaintiffs attempt to provide context for the October 2007 Seminar by referencing statements made at a March 2007 Seminar.*fn2 Plaintiffs' new allegations elaborate upon allegations made in the original Complaint, in particular, that the AU seminar included information about technical aspects of annuities, annuity regulations, and common misunderstandings about annuities and annuity contracts. Plaintiffs allege that the statements contained in the preview to the broadcast or the broadcast itself are "false characterizations."
The Court considers each statement in turn:
In the first minutes of the program, the host made the following introductory statement:
Hansen: Join us in a ground-breaking hidden-camera investigation, as we go behind the scenes to uncover the techniques they use: inside sales meetings -- where we catch the questionable pitches; inside training sessions-- where we discover agents being taught to scare seniors; and finally, inside seniors' homes to reveal the tricks some agents use to puff their credentials to make a sale. (Doc. # 39, ¶ 73.)
Plaintiffs contend that Statement # 1 as presented in the context of the Report is defamatory because it implies that Clark teaches insurance agents to scare seniors when selling annuities. (Doc. # 39, ¶ 74.) They explain that Clark does not teach "scare tactics," rather, he addresses a legitimate and important aspect of financial management for seniors. (Doc. # 39, ¶ 75.) Plaintiffs explain that Clark instructs insurance agents how to identify potentially frightening or disturbing issues to determine the "suitability of insurance products." (Id.)
Defendants, on the other hand, assert that Plaintiffs fail to offer any factual allegations to support their assertions that Clark does not teach scare tactics. Thus, Defendants argue Plaintiffs have failed to show a lack of substantial truth.
Clark admits that he tells attendees of his seminars that he raises issues with potential purchasers that "disturb the hell out of them" and that he "brings out the stuff that--where they can't sleep at night." (Doc. # 39, ¶ 88.) Clark also teaches insurance agents that the value they "bring to the table is when you disturb them; when you uncover problems that are lurking in their mind." (Doc. # 39, ¶ 90.) Given Plaintiffs' own words, the Court finds that the gist of the characterization of the seminar as teaching "scare" tactics is substantially true. The Court finds that Plaintiffs fail to sufficiently plead facts demonstrating the falsity of Defendants' Report with respect to Statement # 1.
Plaintiffs next note the following Dateline voiceovers: Hansen: We've seen some of the tactics insurance agents use to sell seniors. The agents seem awfully slick. How did they get so good? You are about to witness something few people have ever seen -- a school where, authorities say, insurance salesman are being taught questionable tools of the trade.
Hansen: These training sessions are only open to licensed insurance agents. We don't know whether these salesman we've met so far studied here, but the State of Alabama agreed to help us investigate by issuing insurance licenses to two Dateline producers, so we could attend -- and bring along our hidden cameras. (Doc. # 39, ¶¶ 78-79.)
Plaintiffs claim that Statement # 2 implies a link between the salesmen shown at the sting house in Alabama and AU and that Statement # 3 omits details of an alleged collusion between Dateline and ALDOI. (Doc. # 39, ¶¶ 76-79.) However, Plaintiffs' allegations ignore the express disclaimer in Statement # 3 that Dateline did not know whether these salesman had attended AU.
With regard to Statement # 3, because Defendants merely observed a fact, namely that the State of Alabama agreed to help with their investigation, the statement is substantially true. Plaintiffs allege Dateline should have explained the details of the alleged collusion with the State of Alabama, but such an omission, the Court notes, does not render the statement false or defamatory. Accordingly, the Court finds that Plaintiffs fail to sufficiently plead facts demonstrating the falsity of Defendants' Report with respect to Statement ## 2 and 3.
Plaintiffs next note the following Dateline voiceover, combined with hidden camera footage of Clark:
(Hidden Camera). Clark: Annuities are not liquid? That is baloney. Hansen: This is the man in charge of 'Annuity University' --Tyrone Clark, the self proclaimed king of annuity sales. Annuities are legitimate investments for some people, and Clark is a strong advocate for them. He says they're safe and have no risk, which are selling points especially appealing to seniors. (Hidden camera). Clark: What I sell is peace of mind . . . . (Doc. # 39, ¶¶ 80-82.)
Plaintiffs allege that Clark's own statements from the March 2007 Seminar are not a sales technique based on deception and scare tactics. Plaintiffs assert that Clark explains that annuities shift the risks of short term economic volatility from the annuity owner to the insurance company; annuities are not subject to volatility risks in various investment options; and consumers who do not want to risk their money should go to a safer environment. (Doc. # 39, ¶¶ 83-84.) Plaintiffs do not dispute that Clark stated that he sells "peace of mind." (Id., ¶ 84.) Accordingly, under the doctrine of "substantial truth," the Court finds that the gist of Dateline's characterization that Clark associates "peace of mind" with lack of risk in his sales seminar is substantially true.
Plaintiffs next address the following description in the Dateline program of a Massachusetts investigation against Plaintiffs:
Hansen: But what else is Tyrone Clark teaching? In 2002, the State of Massachusetts accused Clark and his companies of a 'dishonest scheme to deceive, coerce and frighten the elderly.' Part of the evidence was the training manual in which Clark tells agents to sell to seniors by assuming they're selling to a 12-year-old' and by hitting their 'fear, anger or greed buttons.' Clark settled that case without admitting any wrongdoing. And, now, his company says it's become 'an industry leader' in promoting ...