From New York Law Journal:

A South Korean University's lawsuit claiming Yale University damaged its reputation and cost it tens of millions of dollars by wrongly confirming that an art history professor it hired had earned a doctorate at the Ivy League school was rejected Thursday by a unanimous federal appeals court.

A panel of the U.S. Court of Appeals for the Second Circuit said there was no actual malice in mistaken statements made to Dongguk University by former Yale deputy general counsel Susan Carney (See Profile), who is now a judge on the court, about Shin Jeong-ah's bogus claim.

The decision was reached by three Third Circuit judges assigned to the case by a intra-circuit assignment committee of the Administrative Office of the U.S. Courts because of Carney's role in the suit. The panel said there was no intent to defame Dongguk when erroneous statements were made to the effect that a Yale associate dean had not confirmed by fax that Shin had been educated at Yale. In fact, the associate dean had, albeit mistakenly, confirmed Shin had a Yale Ph.D.

Dongguk claimed that a scandal involving Shin had cost it millions in government grants and revoked fundraising pledges, as well as being "publicly humiliated and deeply shamed in the eyes of the Korean population," because Yale insisted the fax confirmation must have been a forgery.

"What started out as a straightforward correspondence between universities about a student who sought to teach at one school and claimed she graduated from the other school, now requires that we determine whether the mistaken answer given by Yale is entitled to heightened constitutional protections under the First Amendment," the panel wrote in Dongguk University v. Yale University, 12-2698-cv.

The answer is yes, the panel said, as it upheld the dismissal of defamation, negligence and reckless conduct claims against Yale.

Judges Julio Fuentes, D. Brooks Smith and D. Michael Fisher decided the appeal. Fuentes wrote for the panel.

Shin applied for a position in 2005 with Dongguk, a 100-year-old institution that prides itself as being "one of the most prestigious Buddhist-affiliated universities in the world."

Shin submitted a document with her application that had an exact reproduction of the signature of Yale associate dean Pamela Schirmeister, except that it misspelled the name as "Schirmestr" and misspelled the word century in her listed concentration of "Twentieth Centry Art."

An inquiry started in South Korea over Shin's credentials and Schirmeister sent the confirmation. Yale was later asked if it had sent a fax confirming that Shin had a Ph.D.

Yale and Reinstein made public statements saying the documents supplied by Shin were clearly false and the fax "supposedly sent" by Schirmeister's office "bears no resemblance to the letter her office sends to confirm a degree." And Carney reassured Youngkyo Oh, the president of Dongguk, in writing that the documents, including the Schirmeister fax, were "not authentic."

But Carney had not asked Schirmeister whether she had sent the fax, and had instead asked the Yale Police Department to look into the matter and determine whether Shin had an accomplice at Yale.

Scandal Erupts

Meanwhile, a scandal had erupted over Shin in South Korea that Fuentes said "was exacerbated by media reports that Shin had had an affair with Byeon Yang-kyoon, a senior South Korean government official."

The scandal included reports that Byeon had pressured Dongguk board members to cover up Shin's fraud and had arranged for government funding of the private temple of Dongguk's board chairman.

It was only in November 2007, after the Connecticut U.S. Attorney's Office launched an inquiry and issued a subpoena for records, that Schirmeister's assistant found in a file the inquiry letter from South Korea and Schirmeister's fax mistakenly confirming that Shin had a Yale degree.

Carney then wrote Oh and corrected her inadvertent misstatement about the fax.

Dongguk filed suit, claiming it suffered more than $50 million in losses "due to Yale's false statements, the widely covered reports of Dongguk's wrongdoing, and the Korean prosecutors' investigation of Dongguk and the Ministry of Education."

It claimed defamation in statements by Reinstein and Yale that it never received the inquiry letter; negligence on Schirmeister's incorrect fax and Carney's incorrect letter to Oh and a Yale statement on its website; and reckless and wanton conduct by Carney for failing to determine the authenticity of the Schirmeister fax and Shirmeister's failure to verify the Shin degree.

But Judge Tucker Melancon, sitting in U.S. District court in Connecticut, hearing the case by designation from the U.S. District Court for the District of Western Louisiana, dismissed the lawsuit case in 2012. The university then appealed to the Second Circuit, where oral arguments were heard on March 4.

In his opinion Thursday, Fuentes said Dongguk failed to show actual malice.

"Despite Dongguk's argument that Carney never investigated the authenticity of the Schirmeister Fax, 'mere proof of failure to investigate, without more' does not establish actual malice," Fuentes said. "Here, there is nothing 'more.' The failure to discover a misstatement may demonstrate negligence but it does not establish actual malice."

Nor should Yale be penalized for failing to immediately correct the error, the panel said.

There was "no evidence that Carney, Schirmeister or Reinstein was aware of the probable falsity of the statements at the time they were made or acted with improper motives," the circuit said.

Negligence Claim

On the negligence claim, Fuentes said the statements are "matters of public interest" and can be actionable only where they are made "with knowledge it was false or with reckless disregard of whether it was false or not."

He added, "This is true regardless of the claim at issue, be it defamation, intentional infliction of emotional distress, or negligence; heightened First Amendment protections apply to any tort alleging reputational harm as long as the underlying speech relates to a matter of public concern."

And while Schirmeister's fax was not on a matter of public concern, her "erroneous validation" of Shin's certificate "did not cause the alleged public humiliation and deep shame," he said. "Rather, Dongguk has failed to present any support for an unbroken sequence of events that ties Dongguk's reputational injury to the Schirmeister fax."

Andrew Kratenstein of McDermott Will & Emery argued for the plaintiff.

Felix Springer of Day Pitney in Hartford, Conn., argued for Yale.