Commercial Division Blog

Posted: February 4, 2015 / Categories Commercial, Defamation

Court Examines Absolute and Qualified Privilege to Defamation Claims

On January 15, 2015, Justice Bransten of the New York County Commercial Division issued a decision in International Publishing Concepts, LLC v. Locatelli, 2015 NY Slip Op. 50049(U), analyzing the contours of the litigation privilege and claims for defamation.

In International Publishing Concepts, the plaintiff moved to dismiss counterclaims by the defendant and third-party defendant for defamation. The court granted the motion, explaining, with respect to the issue of whether the alleged defamatory statements were subject to the litigation privilege:

According to the First Department, an absolute privilege applies when the challenged communication was made by an individual participating in a public function, such as judicial or quasi-judicial proceedings. In the context of a legal proceeding, statements made by parties and their attorneys are absolutely privileged if, by any view or under any circumstances, they are pertinent to the litigation. This privilege embraces letters between litigating parties and their attorneys, relating to litigation.

Such a privilege applies to statements made with respect to both pending or contemplated litigation, and is extended to all pertinent communications among the parties, counsel, witnesses, and the court. It applies equally whether a statement was made in or out of court, was on or off the record, or was made orally or in writing. In this case, though no litigation had been commenced at the time that the statements were made, there is no question that absolute privilege can exist even as to statements made with respect to pending or contemplated litigation.

Furthermore, the statements also appear to be pertinent and related to the contemplated litigation. Indeed, the First Department prescribes a fairly broad and encompassing standard for determining whether absolute privilege exists:

Although the privilege will not protect gratuitous statements uttered wholly outside the cause, we have long been guided by the rule that no strained or close construction will be indulged in to exempt a case from the protection of privilege. As long as the subject of an out-of-court communication relates to pending or contemplated litigation, and is made in connection with a judicial proceeding, it furthers an interest of social importance and should be protected.

Here, the emails and attached letters were sent to advise two nonparties—Four Seasons Hotels and Rosewood Hotels and Resorts LLC—of the likelihood of impending litigation against Locatelli and, in particular, of Vertalier's intention to enjoin Locatelli from fulfilling contracts with IPC's current or former clients (including the nonparty hotels). While such an injunction has not yet been sought, that fact should not be outcome-determinative. Rather, it appears to have been intended at the time that these letters and emails were written that such an injunction would be sought, and, if obtained, would affect not only Locatelli, but also these nonparty hotels by preventing Locatelli from performing his obligations under their contract.

In addition, the First Department has held that, where applicable, absolute privilege is extended to all pertinent communications among the parties, counsel, witnesses, and the court. Although it does not yet appear that these nonparty hotels have been subpoenaed as witnesses in this action, the emails and letters can reasonably be read as putting them on notice of the fact that, in light of the contemplated litigation, subpoenas might be forthcoming.

Based on the foregoing, the Court finds that the statements in question are protected by absolute privilege.

(Internal quotations and citations omitted) (emphasis added). The court went on to hold that the complained-about statements also were subject to a qualified privilege, explaining:

For a qualified privilege to exist, the parties to the communication must have an interest in the subject matter of the communication. Stated another way, a communication made bona fide upon any subject matter in which the party communicating has an interest is privileged if made to a person having a corresponding interest, although it contained criminating matter which, without this privilege, would be slanderous and actionable.

In addition, the statement must have been made with a proper purpose, and publication must be in a proper manner and to proper parties only. Lastly, the shield provided by a qualified privilege may be dissolved if plaintiff can demonstrate that defendant made the statement with malice, which may mean either spite or ill will, or knowledge that the statement was false or made in reckless disregard of its truth or falsity.

Here, both the communicating party (Vertalier) and the recipient of the communications (Four Seasons Hotels and Rosewood Hotels and Resorts LLC) shared a common interest in the subject of the communication. Specifically, Vertalier expressed his intention to commence a lawsuit against Locatelli and, in doing so, to seek injunctive relief. Because the intended injunction, if granted, would have affected Locatelli's ability to perform contracts entered into with these nonparty hotels, the requirement of a common interest in the subject of the communication is met.

The purpose of the communication, as well as the propriety of the manner and parties to whom the communication was sent, also militates in favor of qualified privilege. The purpose was to apprise these nonparty hotels of the fact that performance of their contracts might be impacted, as well as to put them on notice of contemplated litigation in which it is likely that they would be subpoenaed as witnesses. The recipients were employees of each nonparty hotel. The communications were sent via email to these specific employees, rather than, for example, being published or otherwise made viewable by a wider audience.

Finally, there is nothing in the record to suggest that the emails and letters were sent with malice, meaning spite or ill will, nor is there anything to indicate Vertalier's knowledge of the statements' falsity or a reckless disregard of their truth or falsity. Rather, the emails written by Vertalier are quite brief, and in substance refer the recipients to the attached letters. The letters, in turn, contain the legal opinions and accusations of Vertalier's and IPC's attorneys.

Accordingly, the Court finds that the statements in question are protected by qualified privilege.

(Internal quotations and citations omitted) (emphasis added).