Commercial Division Blog

Posted: August 29, 2014 / Categories Commercial, Defamation

Defamation Claim Dismissed Where Statements Were Protected By "Fair Reporting" Privilege

On August 28, 2014, Justice Kornreich of the New York County Commercial Division issued a decision in GEM Holdco, LLC v. Changing World Technologies, L.P., Index No. 650941/2013, ruling that a defamation claim arising from a press release explaining a party's defenses and anticipated counterclaims in a pending lawsuit was barred by New York’s absolute "fair reporting" privilege.

In GEM Holdco, a lawsuit arising from an investment in a renewable fuel company, the plaintiff issued a press release announcing the filing of an amended complaint. Two hours later, one of the defendants issued its own press release that, in substance, outlined its defenses and anticipated counterclaims in the lawsuit. The plaintiff claimed that the statements in the defendant’s press release were defamatory and amended its complaint again to add a cause of action for defamation. Justice Kornreich dismissed the claim, ruling that the statements in the defendant's press release were protected by the "fair reporting" privilege set forth in Section 74 of the New York Human Rights Law and could not be the subject of a defamation claim:

It is well settled that public policy mandates that certain communications, although defamatory, cannot serve as the basis for the imposition of liability in a defamation action. When compelling public policy requires that the speaker be immune from suit, the law affords an absolute privilege. The absolute privilege applies to statements uttered in the course of a judicial or quasi-judicial proceeding . . . so long as they are material and pertinent to the questions involved notwithstanding the motive with which they are made. Moreover, the absolute privilege attaches not only to the hearing stage, but to every step of the proceeding in question even if it is preliminary and/or investigatory and irrespective of whether formal charges are ever presented. Whether a statement is at all pertinent to the litigation is determined by an extremely liberal test. A statement made in the course of judicial proceedings is privileged if, by any view or under any circumstances, it may be considered pertinent to the litigation. Additionally, the pertinence of a statement made in the course of judicial proceedings is a question of law for the court, and, in answering that question, any doubts are to be resolved in favor of pertinence.

Plaintiffs, however, argue that the common law absolute ligation privilege does not apply to Ridgeline's press release because such privilege is inapplicable to out-of-court statements made about a lawsuit. While this is true, section 74 of the New York Civil Rights Law provides for a separate "fair reporting" privilege that covers out-of-court accounts of litigation, such as Ridgeline's press release.

Ridgeline's press release, which was issued to indicate its intended course of action with respect to plaintiffs' first amended complaint discussed in GEM's press release (issued two hours beforehand), does not make any actual untrue statements of fact. Rather, Ridgeline's press release outlines its defenses and its intention to assert counterclaims. See Dkt. 166 at 6 ("Ridgeline will pursue civil charges including Fraud, Tortious Interference, and additional claims under the Racketeering in Organized Crime Act . . . and Ridgeline will also show that GEM attempted to extort cash payments from Ridgeline") (emphasis added). These are inactionable expressions of future intent. That such defenses include allegations of plaintiffs' fraud does not inherently make the press release actionable. Proving the claims' underlying merit (or lack thereof) is the very point of this lawsuit. That Ridgeline's press release may be false does not matter because Ridgeline's recitation of its accusations is a substantially accurate account of its position in this litigation. Such account is protected by the fair reporting privilege. The fair reporting privilege is not vitiated by the claim that the described allegations have no merit so long as the described allegations actually reflect the defendant's position in the lawsuit.

(Citations omitted) (emphasis added).

[NOTE: Schlam Stone & Dolan represented the moving defendants in this case]