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Current Developments in the Commercial Divisions of the
New York State Courts by Schlam Stone & Dolan LLP
Posted: March 26, 2020

Absolute Privilege Applies to Contractual Non-Disparagement Clauses

On March 5, 2020, Justice Borrok of the New York County Commercial Division issued a decision in Malta v. Gaudio, 2020 NY Slip Op. 30699(U), holding that the absolute litigation privilege applies to non-disparagement clauses, explaining:

In his opposition papers, and relying on Purple Eagle Entertainment, Inc. v Bray, 2018 NY Slip Op 30538[U] [Sup Ct, NY County 2018], Mr. Malta argues that absolute privilege only applies to defamation claims, but does not apply to a claim that sounds in breach of contract concerning a non-disparagement clause. However, Mr. Malta’s reliance is misplaced. Purple Eagle Entertainment, Inc. does not address the applicability of absolute privilege to breach of contract claims.

Absolute privilege immunizes a speaker or writer from liability for an otherwise defamatory statement to which the privilege applies, regardless of the motive underlying the statement. An oral or written statement made during a judicial proceeding, which is material or pertinent to the litigation, is absolutely privileged. The First Department has held that the absolute witness privilege applies to a claim for breach of a non-disparagement clause. However, the privilege does not apply where where the underlying lawsuit was a sham action brought solely to defame the defendant.

Here, Mr. Malta is suing Mr. Gaudio for statements made by Mr. Gaudio in the DeBenedictis Action. However, because the Gaudio Answer and the Gaudio Affidavit were relevant to Mr. Gaudio’s defense and Mr. DeBenedictus’ claims, Mr. Gaudio’s statements in the DeBenedictis Action are pertinent communications that are subject to absolute privilege. This absolute privilege applies to shield Mr. Gaudio from Mr. Malta’s purported claim for breach of the non-disparagement clause in the Settlement Agreement. The exception to absolute privilege for a sham action does not apply in this case because the DeBenedictis Action was not brought by Mr. Gaudio for the sole purpose of defaming Mr. Malta. Indeed, it was not brought by Mr. Gaudio at all. Accordingly, the Complaint is dismissed because absolute privilege immunizes Mr. Gaudio for any purported liability regarding statements he made during the DeBenedictis Action.

(Internal citations omitted).

Civil litigation can involve claims that cause real reputational harm, but not every statement can be the subject of a defamation claim. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions about whether statements about you or your business can be the basis for a claim for defamation.

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Posted in Commercial, Defamation
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