To be Argued by:
NEIL G. MARANTZ
(Time Requested: 30 Minutes)
APL—2014-00008
New York County Clerk’s Index No. 111597/11
Court of Appeals
of the
State of New York
FRONT, INC.,
Plaintiff,
– against –
PHILIP KHALIL, JAMES O’CALLAGHAN and
ECKERSLEY O’CALLAGHAN STRUCTURAL DESIGN,
Defendants.
–––––––––––––––––––––––––––––––
PHILIP KHALIL,
Third-Party Plaintiff-Appellant,
– against –
JEFFREY A. KIMMEL and MEISTER SEELIG & FEIN LLP,
Third-Party Defendants-Respondents.
BRIEF FOR THIRD-PARTY PLAINTIFF-APPELLANT
THE MARANTZ LAW FIRM
Attorneys for Defendants and Third-
Party Plaintiff-Appellant
150 Theodore Fremd Avenue, Suite A-14
Rye, New York 10580
Tel.: (914) 925-6700
Fax: (914) 925-8800
Date Completed: March 17, 2014
i
TABLE OF CONTENTS
TABLE OF AUTHORITIES…………………………………………………… iii
QUESTIONS PRESENTED ................................................................................... 1
PRELIMINARY STATEMENT............................................................................. 2
FACTUAL BACKGROUND/PROCEDURAL HISTORY ................................... 4
POINT I ................................................................................................................. 17
THE FIRST DEPARTMENT, WITHOUT EXPLANATION, HAS
ERRONEOUSLY DEPARTED FROM SETTLED LAW ................................... 17
New York law has never applied absolute privilege to defamatory statements
made prior to the commencement of judicial proceedings…………………....... 17
The First Department’s deviation from settled law is underscored by reliance
upon erroneous dicta……………………………………………………………. 21
POINT II ............................................................................................................... 25
THERE IS NO RATIONALE – AND NONE ARTICULATED BY THE FIRST
DEPARTMENT – FOR DEPARTING FROM SETTLED LAW AND
DISREGARDING THIS COURT’S EXPRESSED RELUCTANCE TO
EXPAND APPLICATION OF THE ABSOLUTE PRIVILEGE DOCTRINE .... 25
POINT III .............................................................................................................. 29
THE PERILS OF THE APPELLATE ORDER’S DISREGARD OF LONG-
ESTABLISHED POLICY AND EQUITABLE SAFEGUARDS ARE
UNDERSCORED BY THE FACTS AT BAR ..................................................... 29
The Appellate Order Ignores the Fundamental, Equitable Requirement that a
Defamatory Statement be Pertinent to Litigation…………………………….… 29
ii
The Concept of “Prospective Litigation” is Untenably Vague and Contradicts
the Distinction made by this Court in Park Knoll Associates with Respect to
Judicial and Nonjudicial Proceedings…………………………………………... 32
The Appellate Order Glossed Over Issue Finding and the Inherent Issue of
Fact of Determining Malice and Intent on a Pre-Answer Motion to Dismiss….. 34
CONCLUSION ..................................................................................................... 38
iii
TABLE OF AUTHORITIES
Cases
Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 451 N.E.2d 182,
464 N.Y.S.2d 424 (1983)…………………………………………………. 3, 18,
19, 21,
25, 26,
27, 30,
32- 33
Block v First Blood Associates, 691 F. Supp. 685 (SDNY 1988)….……….. 12, 13,
17, 20
Vodopia v Ziff-Davis Publishing Co., 243 A.D.2d 368, 663 N.Y.S.2d 178
(1st Dept. 1997)…………………………………………………………… 12-13,
22-24
Rosen v. Brandes, 105 Misc.2d 506, 432 N.Y.S.2d 597
(Sup. Ct. Nassau Co. 1980)………………………………………………. 16,
18, 20
Zirn v. Cullom, 63 N.Y.S.2d 439 (N.Y. Sup. Ct. 1946)…………………….. 18
Kenny v. Cleary, 47 A.D.2d 531, 363 N.Y.S.2d 606 (2d Dept. 1975)………..18-20,
27
Broome v. Biondi, 96 CIV. 0805 RLC, 1997 WL 83295
(S.D.N.Y. Feb. 10, 1997)…………………………………………………. 18
Reeves v. Am. Broad. Companies, Inc., 580 F. Supp. 84, 89
(S.D.N.Y. 1983) aff'd, 719 F.2d 602 (2d Cir. 1983)………… …………… 18
Uni-Service Risk Management v New York State Association of School
Business Officials, 62 A.D.2d 1093, 403 N.Y.S.2d 592 (3d Dept. 1978)… 19, 20,
27
Andrews v. Gardiner, 224 N.Y. 440, 121 N.E. 341 (1918)…………………. 19, 32
iv
Sexter & Warmflash, P.C. v Margrabe, 33 A.D.3d 10, 817 N.Y.S.2d 37,
828 N.Y.S.2d 315 (1st Dept. 2007)……………………………………….. 21-22,
35
Toker v Pollak, 44 N.Y.2d 211, 376 N.E.2d 163 (1978) ……………………. 25, 27
Stukuls v. State of New York, 42 N.Y.2d 272, 397 N.Y.S.2d 740,
366 N.E.2d 829 (1977) …………………………………………………… 26
Garson v. Hendlin, 141 A.D.2d 55, 532 N.Y.S.2d 776 (2d Dept. 1988)…... 26
Gold v. Intersoft Corp., 128 Misc.2d 198, 489 N.Y.S.2d 660
(Sup. Ct. NY Co. 1985)……………………………………………………… 26, 28
Lacher v Engel, 33 AD3d 10 (1st Dept. 2006)………………………………. 29
Youmans v. Smith, 153 N.Y. 214, 220, 47 N.E. 265, 267 (1897)…………… 30, 32
Martirano v. Frost, 25 N.Y.2d at 507, 307 N.Y.S.2d 425,
255 N.E.2d 693 (1969)………………………………………………….... 30
Simon v. Stim, 11 Misc.2d 653, 176 N.Y.S.2d 475, affd. 10 A.D.2d 647,
199 N.Y.S.2d 405 ………………………………………………………… 32
Mintz & Gold LLP v. Zimmerman, 17 Misc. 3d 972, 848 N.Y.S.2d
814 (N.Y. Sup. Ct. 2007), aff'd, 56 A.D.3d 358, 869 N.Y.S.2d 394
(1st Dept. 2008) …………………………………………………………… 34
Savage Is Loose Co. v. United Artists Theatre Circuit, 413 F.Supp. 555
(S.D.N.Y. 1976)…………………………………………………………... 34
Rinaldi v. Viking Penguin, 52 N.Y.2d 422, 437–438, 438 N.Y.S.2d 496,
420 N.E.2d 377 (1981)…………………………………………………... 36
v
Small v. Lorillard Tobacco Co., Inc., 176 Misc. 2d 413, 672 N.Y.S.2d 601
(Sup. Ct. 1997) rev'd, 677 N.Y.S.2d 515 (App. Div. 1998) superseded,
252 A.D.2d 1, 679 N.Y.S.2d 593 (1998) aff'd, 94 N.Y.2d 43,
720 N.E.2d 892 (1999) and order recalled and vacated sub nom.
Small v. Lorrilard Tobacco Co., Inc., 252 A.D.2d 1, 681 N.Y.S.2d 748
(1998) and rev'd, 252 A.D.2d 1, 679 N.Y.S.2d 593 (1998) aff'd,
94 N.Y.2d 43, 720 N.E.2d 892 (1999)…………………………………… 36-37
Freihofer v. Hearst Corp., 65 N.Y.2d 135, 480 N.E.2d 349 (1985)………. 37
Statutes
CPLR § 3211……………………………………………………………….. 2, 15,
36
Secondary Sources
N.Y. Pattern Jury Instr.-- Civil 3:31 (3d ed. 2013)…………………………... 16
1B Carmody-Wait 2d § 3:474………………………………………….......... 17, 25
1
QUESTIONS PRESENTED
a) Are defamatory statements made by an attorney absolutely privileged
even when no judicial proceedings are pending?
b) Does New York law now recognize the concept of “prospective
litigation” to render defamatory statements absolutely privileged when
there are no pending judicial proceedings?
c) If New York law now recognizes the concept of “prospective
litigation” to render defamatory statements absolutely privileged even
when there are no pending judicial proceedings, must actual litigation
ensue in order to invoke the absolute privilege doctrine?
d) If New York law now recognizes the concept of “prospective
litigation” to render defamatory statements absolutely privileged even
when there are no pending judicial proceedings, provided that actual
litigation ensues, does litigation commenced more than six months
after making such statements serve retroactively to invoke the
absolute privilege doctrine?
e) If New York law now recognizes the concept of “prospective
litigation” to render defamatory statements absolutely privileged even
when there are no pending judicial proceedings, would ensuing
2
nonjudicial proceedings serve retroactively to withdraw the absolute
privilege doctrine?
f) If New York law does now recognize the concept of “prospective
litigation” to render defamatory statements absolutely privileged, must
such defamatory statements be pertinent to eventual litigation in order
to invoke the absolute privilege doctrine?
g) Can a lack of malice be determined as a matter of law on a pre-answer
motion to dismiss a claim for tortious interference with business
relations?
h) Is defamation a requirement for a claim for tortious interference with
business relations?
PRELIMINARY STATEMENT
Third-Party Plaintiff-Appellant PHILIP KHALIL (“Khalil”) hereby appeals
to this Court from so much of an Order of the Appellate Division, First
Department, dated and entered February 14, 2013 (the “Appellate Order”) [R
254]1, as affirmed so much of the Order of the Supreme Court, New York County
(Donna M. Mills, J.), entered May 25, 2012 (the “IAS Order”) [R 18] that
dismissed, on a CPLR §3211 pre-answer motion, Khalil’s Third-Party Complaint
[R 106] sounding in libel per se and tortious interference with business relations.
1 The bracketed “R” numbers refer to the pages in the Record on Appeal.
3
The First Department has taken it upon itself to declare, without fanfare and
without providing any rationale whatsoever, a fundamental change in application
of the doctrine of absolute privilege to libelous statements. In direct contravention
of the long-settled principle under New York law that absolute privilege does not
attach to statements made prior to the commencement of judicial proceedings, and
contrary to the other Appellate Division Departments and this Court’s holding in
Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 451 N.E.2d 182 (1983), the
court below blithely concluded that “absolute privilege attaches to the statements
made by plaintiff’s counsel…in the context of ‘prospective litigation.’” [R 258]
There is no authority for this statement, which was made without regard to
the manifest policy considerations underlying historical application of the absolute
privilege doctrine. No reasoning was advanced for the notion that an attorney
should be afforded absolute immunity for libelous statements made outside the
ambit of judicial proceedings, and under essentially undefined circumstances.
Indeed, given the facts alleged in this case, the First Department has held
that, as a matter of law, an attorney is completely free to write an indisputably
defamatory letter intended to inflict harm so as to prevent a business venture from
going forward that would compete with his client. The court below essentially
wrote a blank check for attorney malfeasance, by employing blanket application of
the concept of absolute privilege where it has never gone before under New York
4
law – i.e., to statements made prior to the commencement of any litigation – and
without regard both to policy considerations and the long-recognized limits of the
doctrine discussed below (e.g., that defamatory statements must at least be
reasonably pertinent to the subject matter of the pending litigation, and not so
needlessly defamatory as to warrant the inference of express malice).
Further, the court determined that malice or “improper means” could not be
attributed to the attorney as a matter of law on a pre-answer motion to dismiss, so
as to render impossible a claim for tortious interference with business relations
under circumstances where the motive for such interference could hardly have
been clearer (and where factual allegations should have been deemed true and
every inference afforded Third-Party Plaintiff-Appellant on a pre-answer motion to
dismiss).
The First Department’s holding that absolute privilege attaches to statements
made in the context of “prospective litigation” is clearly erroneous, disregards
essential policy and equitable considerations, contradicts prior case law on this
issue, conflicts with other Departments of the Appellate Division and should be
reversed.
FACTUAL BACKGROUND/PROCEDURAL HISTORY
The genesis of the parties’ dispute is that Mr. Khalil, the sole professional
engineer employed by Plaintiff, a small New York company that performs design
5
work on store fronts and facades, informed Plaintiff’s principal, Marc Simmons,
that he would be resigning. [R 133] Further, Mr. Khalil revealed that he would be
starting a new engineering firm in New York with Eckersley O’Callaghan, Ltd., an
internationally recognized United Kingdom structural engineering firm famous for
its design of the trademark glasswork used in Apple stores worldwide. [R 133]
The new firm would represent the expansion of the Eckersley O’Callaghan brand
into the local market. [R 133]
Unbeknownst to Mr. Khalil, Mr. Simmons considered Eckersley
O’Callaghan a “competitor” (even though Eckersley O’Callaghan, unlike Plaintiff,
is a structural engineering firm2, is infinitely better known than Plaintiff, and is a
U.K. company)[R 133], and he was intensely jealous of Eckersley O’Callaghan’s
Apple work – Eckersley O’Callaghan’s principal, James O’Callaghan, holds the
patent on the glass stairs and other glasswork used in Apple stores worldwide,
guaranteeing Eckersley O’Callaghan constant business with one of the world’s
most successful companies [R 114].3 Mr. Simmons was obviously mortified that
his valued employee was not only leaving Plaintiff, but was doing so to start what
2 Plaintiff is not a professional services corporation.
3 Much later, in its Complaint, Plaintiff alleged that Eckersley O’Callaghan was a “competitor”
and argued, while conceding that Plaintiff has never done any work for Apple, and despite the
fact that Eckersley O’Callaghan owns valuable patents associated with Apple and is guaranteed
work on its stores worldwide, Plaintiff nevertheless could have had Apple work itself had it been
given the opportunity – and that it somehow blames Mr. Khalil, who had nothing whatsoever to
do with Apple, for this state of affairs [R 86].
6
he perceived to be a competing business in New York headed by more successful,
internationally-known colleagues.
Accordingly, Plaintiff sought to destroy the prospective business relationship
by damaging Mr. Khalil’s reputation.
The Kimmel Letter
Soon after Mr. Khalil gave notice that he was leaving Plaintiff to form the
new Eckersley O’Callaghan company, Plaintiff claimed that it was shocked to
notice Mr. Khalil downloading files from his office computer onto an external hard
drive, and assumed these were unidentified “confidential” company files. [R 133]
Seizing upon the opportunity to punish Mr. Khalil, Plaintiff not only forced him
immediately to leave the office, while retaining Mr. Khalil’s hard drive and
personalty, but also enlisted Third-Party Defendant-Respondent Jeffrey A.
Kimmel, an attorney from Third-Party Defendant-Respondent Meister Seelig &
Fein LLP, to write a letter to Mr. Khalil, which Mr. Kimmel copied to James
O’Callaghan (later a defendant) and Brian Eckersley (a non-party). The letter,
dated April 8, 2011 (the “Kimmel letter”), [R 132] was indisputably defamatory
and clearly designed to harm Mr. Khalil and impede the formation of the proposed
New York business venture.
7
In his letter, Mr. Kimmel expressly acknowledged that Mr. Khalil was about
to enter into a prospective business relationship with Mr. O’Callaghan and
“Eckersley O’Callaghan,” that they were “in the process of establishing an
associated company to Eckersley O’Callaghan with offices to be located in New
York,” and that Mr. Khalil “would initially be performing Apple Store engineering
work and that [his] compensation arrangement with James O’Callaghan, one of the
firm’s directors, would be a 50/50 split.” [R 133]
Mr. Eckersley and Mr. O’Callaghan, expressly copied on the letter, were its
obvious target audience. The Kimmel letter made sure to inform these United
Kingdom residents that Mr. Khalil had engaged in a wide range of conduct that
was both unethical and illegal in the United States. The letter stated, for example,
that Mr. Khalil had “attempted to steal” various items, including purported “trade
secrets,” and that Mr. Khalil had thereby committed “a serious offense that is
punishable by up to ten years in prison under the Economic Espionage Act of
1996…”
The Kimmel letter also gratuitously advised Mr. Eckersley and Mr.
O’Callaghan that Mr. Khalil had “knowingly violated the terms of [his] application
[to the United States Citizenship and Immigration Services] and immigrant status.”
It further accused Mr. Khalil, as a professional engineer, of violating “several
8
codes of professional conduct and ethics of various boards of licensure and
professional associations…” [R 135]
Every one of these allegations of unlawful activity was expressed in the
Kimmel letter as a statement of fact, not based upon information and belief or
otherwise qualified in any manner.
The only conceivable motive for Mr. Kimmel’s publication of the letter to
Mr. O’Callaghan and Mr. Eckersley was to damage Mr. Khalil’s reputation and
sabotage the prospective business relationship, and thus eliminate the perceived
threat of competition to Mr. Kimmel’s client, Plaintiff, that would occur if
Eckersley O’Callaghan Ltd. were to establish a new company in New York.
Certainly a letter from a New York lawyer, sent to U.K. residents informing
them that the person whom they intended to open their New York office had
“knowingly violated” his immigration application and that his “immigration status”
had been compromised thereby, would be expected to cause them to reconsider the
venture, as would the fact that an American attorney was also advising these U.K.
residents that Mr. Khalil should be expected to spend ten years in prison for
violating the federal laws of the United States.
The Kimmel letter cannot reasonably be perceived to have served any
practical purpose beyond defaming Mr. Khalil and interfering with the business
9
relationship.4 Although couched in terms of a “cease and desist” letter, there was
nothing for the recipients of the letter to refrain from doing, beyond abandoning
the new business venture in New York.5
Manifestly, defamatory allegations regarding Mr. Khalil’s “immigration
status” could not have had any possible relevance to any potential issues or claims
between Plaintiff and the recipients of the letter, and could only have been
interposed to defame Mr. Khalil, discourage Mr. Eckersley and Mr. O’Callaghan
from considering doing business with him, and to interfere with their proposed
business venture.
4 Third-Party Defendants-Respondents, in a cynical ploy to gain empathy and minimize the
obviously offensive nature of the Kimmel letter, have characterized it as an offer of settlement,
although there is nothing in the letter that even remotely suggests this – it was a letter that came
entirely out of the blue to attack Mr. Khalil and badmouth him to the individuals with whom he
was about to enter into business, a fact expressly acknowledged in the Kimmel letter.
5 The Kimmel letter stated that Mr. Khalil had not succeeded in obtaining any confidential or
proprietary information, but merely alleged that he had attempted unsuccessfully to do so. Thus,
there was no confidential information for him to cease and desist from using, and in any event
not a single item of confidential or proprietary information of Plaintiff was identified in the
Kimmel letter, let alone alleged to have been in Mr. Khalil’s possession. Nor was there even a
suggestion that Messrs. Eckersley and O’Callaghan might use, and should “cease and desist”
from using, any so-called, unidentified “confidential information”; to the contrary, Kimmel
acknowledged that the new venture would be performing Apple work (which, since Eckersley
O’Callaghan were Apple’s engineers with a patent on the Apple glasswork, and Plaintiff had no
experience with Apple whatsoever, would not logically lead to a conclusion that Eckersley
O’Callaghan would in any way be using unidentified proprietary information from Plaintiff).
10
Legal Proceedings
On or about October 12, 2011 – more than six (6) months after the Kimmel
letter was sent – Plaintiff filed the Summons and Complaint in this action against
Mr. Khalil, Mr. O’Callaghan, and “Eckersley O’Callaghan Structural Design.”6 [R
76]
The Complaint alleged, in conclusory fashion, violations of Mr. Khalil’s
employment obligations, misuse of unidentified “trade secrets” and “confidential
information,” and the United Kingdom domiciliaries’ vaguely alleged participation
in Mr. Khalil’s alleged misconduct, including “civil conspiracy.”
Mr. Khalil thereafter commenced a third-party action against Mr. Kimmel
and his firm, Meister Seelig & Fein LLP, for damages in connection with their
defamatory statements and malicious attempts to thwart Mr. Khalil’s planned
business venture. The Third-Party Complaint [R 106] sought recovery on two
theories: libel per se and tortious interference with contract. While the defamatory
statements about alleged unlawful activity related to Mr. Khalil’s professional
standing and immigration status constituted libel per se, Mr. Khalil also alleged
that he was actually damaged by such statements, as the prospective business
6 There is no entity with that name, but it is a trade name registered in the United Kingdom by
the U.K. company “Eckersley O’Callaghan Ltd.”
11
arrangement – acknowledged by Mr. Kimmel to be a 50-50 split – was
subsequently compromised, to Mr. Khalil’s detriment.
Defendants filed a motion to dismiss the Complaint for lack of personal
jurisdiction against Eckersley O’Callaghan Ltd. (the U.K. company presumably
targeted by Plaintiff, though misnamed in the caption), and U.K. resident Mr.
O’Callaghan personally, and, given the hodgepodge of vague claims concerning
“trade secrets” that by law are required to be pleaded with specificity, and the fact
that there is no tort of “civil conspiracy” under New York law, Defendants further
moved to dismiss several causes of action in the Complaint, and to disqualify
Third-Party Defendants-Respondent Meister Seelig & Fein LLP from serving as
attorneys for Plaintiff, inasmuch as they were parties to the lawsuit and would be
witnesses.
Third-Party Defendants-Respondents in turn filed a motion to dismiss the
Third-Party Complaint, on the alleged grounds that an attorney has an absolute
privilege at any time, even when no litigation is pending, to publish defamatory
material and to interfere with prospective business relations.
By Order of the Supreme Court, New York County (Donna M. Mills, J.)(the
“I.A.S. court”), dated May 23, 2012, and entered on May 25, 2012 (the “IAS
Order”), the two motions were consolidated for decision. [R 18]
12
The Third-Party Complaint was dismissed. The I.A.S. court found that the
Kimmel letter was “rambling and inartful,” and acknowledged a Southern District
case declaring that "New York law simply does not provide an absolute privilege
for statements made prior to the institution of a judicial proceeding," Block v First
Blood Assoc., 691 F.Supp 685, 699 (SDNY 1988). [R 40]
However, the I.A.S. court nevertheless held that “It is the decisions of the
Appellate Division, First Department, not the decisions of the United States
District Court for the Southern District of New York relied on by Khalil, to which
this court must look for precedent.” [R 40] It then relied instead on erroneous dicta
– which, indeed, the I.A.S. court acknowledged was erroneous – from a brief
memorandum decision from a First Department case, Vodopia v Ziff-Davis
Publishing Co., 243 A.D.2d 368, 663 N.Y.S.2d 178 (1st Dept. 1997), which had
stated, incorrectly, that a letter sent “during the course of negotiations to settle a
copyright lawsuit threatened by plaintiff's client” was absolutely privileged, when
in fact the letter in question had been sent while litigation was actually pending,
not merely “threatened” beforehand:
While it appears that the Appellate Division may well
have erroneously believed that the letter in question in
Vodopia was a pre-litigation letter, what is important for
our purposes is the fact that the Appellate Division
concluded that an absolute privilege attaches to a pre-
litigation letter.
13
See the IAS Order, citing Vodopia v Ziff-Davis
Publishing Co., 243 A.D.2d 368, 663 N.Y.S.2d 178 (1st
Dept. 1997). [R 40]
The U.S. District Court had been correct in its survey of New York
defamation law, and its decision in Block v First Blood Assoc., 691 F.Supp 685,
699 (SDNY 1988), had not been relied upon so much for the precedent of its
holding, but rather as an authority that had analyzed New York state court
decisions on this topic, and had concluded that "New York law simply does not
provide an absolute privilege for statements made prior to the institution of a
judicial proceeding." Instead of acknowledging the manifest truth of this statement,
or at least using it as a starting point for a reasonable analysis of the issue, the
I.A.S. court based its decision upon a passing statement in a brief memorandum
decision that the I.A.S. court itself acknowledged had been predicated upon a
mistake.
Certainly, erroneous dicta from the First Department, in a brief
memorandum decision, without explanation or rationale, should not be perceived
as rising to the level of precedent whereby a sea change in defamation law in this
state becomes the result.
The I.A.S. court failed even to address the Third Cause of Action in the
Third-Party Complaint, for tortious interference with business relations, and
summarily dismissed the entire pleading.
14
Defendants’ motion was granted with respect to Mr. O’Callaghan, and the
Complaint dismissed against him for lack of personal jurisdiction. However, the
I.A.S. court denied Defendants’ motion to dismiss against Eckersley O’Callaghan
Ltd. and instead ordered a hearing to determine whether facts could be established
sufficient to confer long-arm jurisdiction over the United Kingdom company.
The Order granted dismissal of the First Cause of Action in the Complaint
for “civil conspiracy,” but denied dismissal of the remaining Causes of Action and
otherwise held the motion in abeyance pending the result of the hearing. The
motion to disqualify Meister Seelig & Fein LLP was denied as Third-Party
Defendants-Respondents’ motion to dismiss the Third-Party Complaint had been
granted.
The Appeal to the First Department
Both Defendants and Plaintiff appealed the I.A.S. court’s holding with
respect to jurisdiction. Third-Party Plaintiff-Appellant appealed the dismissal of
the Third-Party Complaint.
By Decision and Order of the Appellate Division, First Department, dated
and entered February 14, 2013 (the “Appellate Order”)[R 254], the First
Department modified the IAS Order by holding that there was jurisdiction over
both U.K. residents, Eckersley O’Callaghan Ltd. and James O’Callaghan
15
personally, and dismissing the Tenth and Eleventh Causes of Action in the
Complaint.
Otherwise, the First Department affirmed the IAS Order, and upheld the
dismissal of the Third-Party Complaint. The First Department, relying upon
essentially the same erroneous dicta that the I.A.S. court had cited, stated that the
Kimmel letter was absolutely privileged, because it was “issued in the context of
‘prospective litigation.’” [R 258] Further, the First Department concluded that,
even though the Third-Party Complaint alleged that Kimmel had intentionally and
maliciously interfered with Mr. Khalil’s prospective business advantage, that “even
viewed in the liberal light required on a motion to dismiss pursuant to CPLR 3211,
the third-party complaint and the documentary evidence fail, absent the libel
claims, to allege the “malice” or use of “improper or illegal means” required to
state a cause of action for tortious interference with business relations.” [R 258]
The Appellate Order failed to consider the history of decisional law
concerning application of the absolute privilege doctrine and the policy
considerations reflected therein. Nor did the court address the essentially
indisputable point that, even if absolute privilege were properly deemed to apply to
statements made prior to any judicial proceedings, the defamatory statements made
about Mr. Khalil’s “knowing violation” of his immigration application and his
immigration status were entirely gratuitous and had nothing whatsoever to do with
16
the breach of employment contract/breach of fiduciary duty litigation eventually
commenced. Thus, such statements were not reasonably pertinent to judicial
proceedings – even to subsequent judicial proceedings – so as to invoke absolute
privilege. Rosen v. Brandes, 432 N.Y.S.2d 597; 601 (N.Y. Sup. Ct. 1980); N.Y.
Pattern Jury Instr.-- Civil 3:31 (3d ed. 2013) (“A statement is not pertinent if it was
so unrelated to, or out of context with, the underlying proceeding to indicate that it
was motivated solely by a desire to defame.”) 7
7 Even with the benefit of hindsight, knowing that there was eventual litigation commenced and
being able to see that the Complaint had nothing whatsoever to do with Mr. Khalil’s immigration
status, the court below still failed to consider the issue of pertinence. As discussed below, this
important factor in the application of absolute privilege would be obscured, if not rendered
extinct altogether, by the First Department’s blanket application of absolute privilege to
“prospective litigation.”
17
POINT I
THE FIRST DEPARTMENT, WITHOUT
EXPLANATION, HAS ERRONEOUSLY
DEPARTED FROM SETTLED LAW
New York Law Has Never Applied Absolute Privilege to Defamatory
Statements Made Prior to the Commencement of Judicial Proceedings
New York law has simply never afforded defamatory statements absolute
privilege if made prior to the commencement of judicial proceedings. This is a
matter of hornbook law:
The defense of privilege is unavailable, however, where
the attorney's statements are unrelated to any pending
legal action.
1B Carmody-Wait 2d § 3:474
Indeed, prior to this very case, there has never been a published New York
decision whereby an otherwise defamatory statement made by an attorney prior to
the commencement of legal proceedings was held to be absolutely privileged.
The Southern District, analyzing the history of decisional law, declared that
"New York law simply does not provide an absolute privilege for statements made
prior to the institution of a judicial proceeding." Block v First Blood Assoc., 691
F.Supp 685, 699 (SDNY 1988).
Other courts have reached the same conclusion:
18
Under New York law, absolute privilege applies to all
communications made in the course of a judicial
proceeding, and that are pertinent to the pending
proceeding. See Zirn v. Cullom, 63 N.Y.S.2d 439, 441
(N.Y. Sup. Ct. 1946). The absolute privilege has only
been extended to pertinent statements made on or after
the commencement of a judicial proceeding. See Rosen v.
Brandes, 432 N.Y.S.2d 597; 601 (N.Y. Sup. Ct. 1980);
Kenny v. Cleary, 363 N.Y.S.2d 606, 609 (N.Y. App. Div.
1975).
Broome v. Biondi, 96 CIV. 0805 RLC, 1997 WL 83295
(S.D.N.Y. Feb. 10, 1997) [emphasis supplied.]
Similarly,
The courts of New York have held that the statutory and
common-law privileges attach only after the action is
commenced…
Reeves v. Am. Broad. Companies, Inc., 580 F. Supp. 84,
89 (S.D.N.Y. 1983) aff'd, 719 F.2d 602 (2d Cir. 1983).
This Court’s definitive statement on application of absolute privilege is in
accord. In Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 451 N.E.2d 182, 464
N.Y.S.2d 424 (1983), it was made clear initially that absolute privilege is to be
extremely limited in application: “As a matter of policy, the courts confine
absolute privilege to a very few situations.” 59 N.Y.2d at 210. The doctrine arises
out of concern for the integrity of the judicial process, and is in no way intended to
protect attorneys:
Absolute privilege is based upon the personal position or
status of the speaker and is limited to the speaker’s
official participation in the processes of government...
They are granted this protection for the benefit of the
19
public, to promote the administration of justice, and only
incidentally for the protection of the participants.” Id. at
209. [emphasis supplied.]
In Park Knoll Associates this Court proceeded to cite Kenny v Cleary, 47
A.D.2d 531, 363 N.Y.S.2d 606 (2d Dept. 1975), with respect to the Second
Department’s holding that defamatory statements made “during the course of a
judicial proceeding” were absolutely privileged, but “[t]he first through the fifth
causes of action relate to alleged defamatory statements made before the
commencement of that judicial proceeding and do not qualify for absolute
privilege.”
Then, this Court cited a Third Department case, Uni-Service Risk
Management v New York State Association of School Business Officials, 62 A.D.2d
1093, 1094, 403 N.Y.S.2d 592, 594 (3d Dept. 1978), wherein that court had held
that the defamatory statement in question was only subject to a qualified privilege,
like any other case of legal representation not related to a pending action: “The
statement was made before the commencement of Action No. 2 and thus an
absolute privilege did not attach by reason of that proceeding.” Id.8
8 While Park Knoll Associates gave some examples where the statements were made by
witnesses as opposed to attorneys (e.g., in Kenny v Cleary), this Court has long held that “there is
no difference in respect of degree between the privilege of counsel and that of parties and
witnesses. They are phases of the same immunity.” Andrews v. Gardiner, 224 N.Y. 440, 446,
121 N.E. 341, 343 (1918).
20
These Second and Third Department cases are the same cases relied upon in
Rosen v. Brandes, 105 Misc. 2d 506, 432 N.Y.S.2d 597, 601 (Sup. Ct. 1980):
Nevertheless, the Appellate Division, Second Judicial
Department has clearly held that defamatory statements
made before the commencement of a judicial proceeding
are not within the protection of the absolute privilege rule
(Kenny v. Cleary, 47 A.D.2d 531, 532, 363 N.Y.S.2d
606). Moreover, the Third Department has recently relied
upon the Kenny decision in reaching a similar conclusion
(Uni-Service Risk Management, Inc. v. New York State
Association of School Business Officials, 62 A.D.2d
1093, 403 N.Y.S.2d 592).
Rosen v. Brandes, 105 Misc. 2d 506, 511, 432 N.Y.S.2d
597, 601 (Sup. Ct. 1980)
Rosen v. Brandes was in turn cited by Block v First Blood Assoc., 691
F.Supp 685, 699 (SDNY 1988) in making its pronouncement that "New York law
simply does not provide an absolute privilege for statements made prior to the
institution of a judicial proceeding." Thus, this Court, in relying upon the same
cases, was in accord concerning limitation of the doctrine of absolute privilege to
statements made only after the commencement of judicial proceedings, with the
Second and Third Departments also in line with this concept.
Accordingly, with its holding in the Appellate Order, the First Department
stands completely alone in determining that absolute privilege applies to
“prospective litigation” and thus protects defamatory statements made without any
judicial proceedings having even been commenced.
21
The First Department’s Deviation From Settled Law is Underscored by Its
Reliance Upon Erroneous Dicta
Rather than consider this Court’s decision in Park Knoll Associates and its
analysis of the cases cited therein, the Appellate Order relied superficially upon
two brief First Department memorandum decisions, neither of which provides
actual support for its position.
First, the Appellate Division cited Sexter & Warmflash, P.C. v Margrabe, 33
A.D.3d 10, 817 N.Y.S.2d 37, 828 N.Y.S.2d 315 (1st Dept. 2007), wherein the
Court had expressed dicta that was apparently relied upon in the Appellate Order:
New York courts have consistently held that a
communication of the kind at issue here – a letter among
parties and counsel on the subject of pending or
prospective litigation – enjoys the protection of the
absolute privilege for judicial proceedings.
Id. at 174, 325.
Here we see the words “prospective litigation” that the First Department
seized upon in the Appellate Order. However, the use of this expression was mere
dicta; in Sexter & Warmflash the allegedly defamatory statement at issue was not
in fact related to “prospective” litigation, but was expressly related to pending
litigation (contained in a letter from clients discharging their attorney from such
litigation). Thus, the words “or prospective litigation” were gratuitous; mere dicta
that had nothing to do with the facts at hand and the making of that decision.
22
Further, such dicta is obviously incorrect: New York courts have
consistently held that only statements made during pending judicial proceedings
are afforded the immunity of absolute privilege. Then, the quote is inapposite to
the case at bar, inasmuch as the Kimmel letter was decidedly not a letter among
“parties and counsel” but was a letter published by an attorney to third parties who
did not have the benefit of counsel inasmuch as there had been no pending
proceedings and indeed not even a prior hint of any contemplated litigation. The
facts at bar thus clearly do not fall within the purview of the above quote, which is
inaccurate in any event. Sexter & Warmflash is, accordingly, completely
distinguishable from the case at bar.
Sexter & Warmflash cites the second case relied upon by the First
Department in the Appellate Order, Vodopia v Ziff-Davis Publishing Co., 243
A.D.2d 368, 663 N.Y.S.2d 178 (1st Dept. 1997). This is yet another extremely
brief First Department memorandum decision with erroneous dicta that has created
confusion as such dicta has mistakenly become repeated by that court as precedent
(e.g., both by Sexter & Warmflash and by the Appellate Order).
In Vodopia v. Ziff-Davis Publ. Co., the First Department stated that that the
allegedly libelous letter in that case was sent “during the course of negotiations to
settle a copyright lawsuit threatened by plaintiff's client.” The word “threatened”
is manifest, because it implies litigation that has not yet commenced, “prospective”
23
litigation if you will. Absent the word “threatened,” there would no reason to
assume that the libelous letter was sent before the commencement of litigation.
However, the Court’s statement was incorrect. Since the brief memorandum
opinion said little about the underlying facts, Third-Party Plaintiff-Appellant
obtained and submitted to the I.A.S. court a copy of the unreported lower court
decision in that case. [R 218] That decision made it clear that, in point of fact, the
allegedly libelous letter in Vodopia was written not in anticipation of “threatened”
litigation, but rather as part of an attempt to resolve a litigation that was already
pending:
In the within matter, plaintiff himself acknowledges that
defendants sent the [letter], at least in part, to compel a
settlement of the pending litigation…
It is clear that plaintiff cannot establish the impertinency
or irrelevance of the challenged statements to the
litigation that was pending. On the contrary, a fair
reading of the [letter] discloses that all the terms therein
are absolutely privileged because they relate directly to
the underlying litigation.
Decision/Order dated August 16, 1996, Index No.
126854/95, pp. 4-5 [emphasis supplied.][R 222-223]
Thus, the Appellate Division’s holding in Vodopia – its resolution of the
actual case before it – in no way contradicted the principle, articulated by the
authorities set forth above, that absolute privilege can only be invoked once
litigation has actually commenced.
24
The I.A.S. court, in its decision, acknowledged that “the Appellate Division
may well have erroneously believed that the letter in question in Vodopia was a
pre-litigation letter.” However, the I.A.S. court felt constrained to follow the First
Department’s conclusion regardless of its reasoning.
The First Department merely incorporated this error into the Appellate
Order, without any analysis whatsoever. As a result, the First Department has
changed the law. It has done so without ever having acknowledged that it is doing
so, without any survey or analysis of existing law, but merely by making an
incorrect pronouncement in dicta, and then repeating that error so that it has now
gained the power of precedent. But it is fundamentally incorrect, at odds with
every other court that has considered the issue, and has become the law without the
First Department ever having included in an opinion any hint of the significance of
the issue, or any rationale for its holding.
25
POINT II
THERE IS NO RATIONALE – AND
NONE ARTICULATED BY THE FIRST
DEPARTMENT – FOR DEPARTING
FROM SETTLED LAW AND
DISREGARDING THIS COURT’S
EXPRESSED RELUCTANCE TO
EXPAND APPLICATION OF THE
ABSOLUTE PRIVILEGE DOCTRINE
Without question, the First Department has deviated from established law by
declaring that absolute privilege applies to words published by an attorney in
connection with “prospective litigation,” where there are no pending judicial
proceedings of any kind. It is contrary to this Court’s holding in Park Knoll
Associates, and indeed contravenes hornbook law (e.g., 1B Carmody-Wait 2d §
3:474).
More to the point, the First Department has done so in clearly erroneous
fashion, without regard to precedent, and without awareness of or sensitivity to the
policy considerations behind that precedent. Indeed, the First Department has
rewritten the law with respect to application of the absolute privilege doctrine, and
has done so without expressing any rationale whatsoever for its actions.
This Court has long expressed its view that absolute privilege is a doctrine
that should be “stringently applied,” Toker v Pollak, 44 N.Y.2d 211, 219, 376
N.E.2d 163 (1978), which the courts traditionally “confine … to a very few
26
situations.” Park Knoll Assoc. v. Schmidt, 59 N.Y.2d at 210, 464 N.Y.S.2d 424,
451 N.E.2d 182. Its applicability should not be extended “to cases that would
represent a departure from the policies which originally brought the doctrine into
being.” Stukuls v. State of New York, 42 N.Y.2d 272, 277, 397 N.Y.S.2d 740, 366
N.E.2d 829 (1977); see also Garson v. Hendlin, 141 A.D.2d 55, 59, 532 N.Y.S.2d
776, 778 (2d Dept. 1988).
An insightful analysis of this Court’s limited approach to application of the
absolute privilege doctrine was made in Gold v. Intersoft Corp., 128 Misc.2d 198,
489 N.Y.S.2d 660 (Sup. Ct. NY Co. 1985). There, the Court – in light of this
Court’s holding in Park Knoll Associates – rejected application of absolute
privilege to an attorney’s letter sent, as in the present case, prior to the
commencement of legal proceedings.9 An attorney had sent a letter to board
members of a corporation, urging them to take action against one of its directors on
the grounds that he had made misrepresentations concealing conflicting interests
and breach of fiduciary duties, and advising them that his client intended to bring
legal proceedings.
The letter in question involved “prospective litigation” inasmuch as
contemplated litigation was expressly referenced therein. However, the Court
9 Actually, in that case there was in fact pending litigation, but such proceedings did not involve
the issues raised in the attorney’s letter. In other words, the case at bar – where there were no
pending proceedings whatsoever when the Kimmel letter was published – provides an even
stronger case for rejection of absolute privilege.
27
rejected the movant’s claim that the letter was absolutely privileged and thus
denied the motion to dismiss the libel claims against the attorney. The Court
analyzed this Court’s holding in Park Knoll Associates and the cases cited by this
Court therein – the Second Department’s holding in Kenny v. Cleary, 47 A.D.2d
531, 363 N.Y.S.2d 606 (2d Dept. 1975), and the Third Department’s holding in
Uni-Service Risk Mgt. v. New York State Asso. of School Business Officials, 62
AD2d 1093, 403 N.Y.S.2d 592 (3d Dept.1978) – and determined that “the general
language adopted in several decisions appears to require a restrictive approach to
the few litigation situations in which absolute privilege will be granted.” 128
Misc2d at 200-201.
The Court found that “particularly instructive is the case of Toker v Pollak
(44 NY2d 211).” In that case, this Court confirmed that the absolute privilege
doctrine has been “stringently applied,” 44 N.Y.2d at 219, and held that where
derogatory information was supplied to the Mayor's screening committee with
respect to a prospective candidate for judicial appointment, with an affidavit then
submitted to the District Attorney in lieu of testimony before the Grand Jury,
statements made in lieu of Grand Jury testimony were not protected by an absolute
privilege:
The Court of Appeals held that the grant of absolute,
rather than qualified privilege, which in effect conferred
immunity for statements, was to be stringently applied.
28
The protection of absolute privilege is to be granted only
to those who participate “in a public function, such as
judicial, legislative, or executive proceedings…” The
Court drew a distinction between the witness testifying
before a Grand Jury, a statement made in a judicial
proceeding, which would be given absolute immunity,
and a communication with a law enforcement officer
antecedent thereto. The communication of a complainant
even to a District Attorney, which clearly has to precede
the commencement of criminal proceedings, does not
constitute an incident to a judicial proceeding.
As the statements here were extrinsic to any pending
lawsuit, application of the law as enunciated by the Court
of Appeals compels denial of absolute privilege or
immunity to the statements made by defendants in their
… letter.
Gold v. Intersoft Corp., 128 Misc. 2d 198, 201-02, 489
N.Y.S.2d 660 (Sup. Ct. 1985).
Accordingly, not only is the law well-settled that absolute privilege does not
apply to attorney communications made outside the ambit of judicial proceedings,
but the rationale for the rule is predicated upon this Court’s repeated
acknowledgment of a compelling, well-articulated public policy limiting
application of such immunity.
The First Department was apparently oblivious both to this policy and case
law precedent, in blithely determining that absolute privilege applies to
communications made “in the context of ‘prospective litigation.’”
29
POINT III
THE PERILS OF THE APPELLATE
ORDER’S DISREGARD OF LONG-
ESTABLISHED POLICY AND
EQUITABLE SAFEGUARDS ARE
UNDERSCORED BY THE FACTS AT
BAR
The illogic and inequity that would follow from the Appellate Order’s
disregard of precedent is manifest. Indeed, the circumstances at bar highlight the
potential issues arising from such departure from settled law and policy.
The Appellate Order Ignores the Fundamental, Equitable Requirement that a
Defamatory Statement be Pertinent to Litigation
For example, the First Department’s unprecedented blanket application of
absolute privilege to “prospective litigation” conflicts with the long-established
concept that, even if made in the course of judicial proceedings, defamatory
statements still need to be reasonably pertinent to such proceedings in order to
entitle the speaker to absolute immunity. As the First Department itself has
declared:
It is well established that a statement made in the course
of legal proceedings is absolutely privileged if it is at all
pertinent to the litigation. Lacher v. Engel, 33 A.D.3d
10, 817 N.Y.S.2d 37 (1st Dept. 2006).
This Court has essentially forever held that equitable considerations are
paramount; that if abused – if the statement is “so needlessly defamatory as to
30
warrant the inference of express malice” – then the protection of absolute
immunity is withdrawn:
If counsel, through an excess of zeal to serve their
clients, or in order to gratify their own vindictive
feelings, go beyond the bounds of reason, and by main
force bring into a lawsuit matters so obviously
impertinent as not to admit of discussion, and so
needlessly defamatory as to warrant the inference of
express malice, they lose their privilege, and must take
the consequences. In other words, if the privilege is
abused, protection is withdrawn.
Youmans v. Smith, 153 N.Y. 214, 220, 47 N.E. 265, 267
(1897) [emphasis supplied]10
Thus, while the question whether a statement is pertinent is determined by
an ‘extremely liberal’ test (Martirano v. Frost, 25 N.Y.2d 505, 307 N.Y.S.2d 425,
255 N.E.2d 693 (1969)), there are limits: the statement must be reasonably
pertinent to the pending judicial proceedings, and the statement must not be “so
needlessly defamatory as to warrant the inference of express malice.”
Yet, this essential question of pertinence to judicial proceedings is mooted,
or at the very least obscured, by removing the requirement of judicial proceedings
from the equation and simply applying absolute privilege without actual context.
How can a court determine if a statement is reasonably pertinent to judicial
proceedings if there are no such proceedings? Without an actual, defined context,
10 Although an ancient case, this Court cited Youmans v. Smith in Park Knoll Associates, this
Court’s most recent statement on applicability of absolute privilege.
31
when is a statement “needlessly defamatory”? Will – or should – a court speculate
as to whether a statement is reasonably pertinent to a potential lawsuit?
At bar, both the I.A.S. court and the First Department, in reflexively bowing
to erroneous dicta in memoranda decisions, and perceiving such dicta to allow for
blanket application of the absolute privilege doctrine, failed even to consider the
pertinence of the most gratuitous and mean-spirited of defamatory statements in
the Kimmel letter: the accusation that Khalil violated the law with respect to his
immigration application and status.11 Indeed, while such statements could not
possibly have had relevance even to potential litigation – Khalil’s former employer
could not have had standing to assert civil damages in connection with the
allegation of criminal violation of an immigration application and status – here the
I.A.S. court and the First Department had the benefit of hindsight. These courts
knew that litigation had ensued, albeit over six months after the Kimmel letter was
published, and they had the benefit of seeing what was in the complaint.
(Presumably this would not generally be the case with respect to mere “prospective
litigation.”) Nevertheless, the courts failed to consider the pertinence – or, more to
the point, the complete lack thereof – of such defamatory statements even to the
ensuing proceedings.
11While such statements were irrelevant to any potential litigation, they clearly were of manifest
importance in the context of intentional injury to Khalil and his contemplated business venture:
an attorney advising foreigners that the person whom they would have run their new, New York
office was essentially an illegal immigrant.
32
Such statements concerning immigration in fact had no relation whatsoever
to the eventual lawsuit for breach of employment contract/breach of fiduciary duty,
and were “so needlessly defamatory as to warrant the inference of express malice.”
But the point is that even in a case where litigation did eventually ensue, and there
was an actual complaint to review, there was no consideration whatsoever given by
either court to the issue of pertinence. What scope of review, then, would a court
be expected to undertake in situations of “prospective litigation” where no
subsequent litigation ensued before the motion to dismiss a libel claim was made?
The Concept of “Prospective Litigation” is Untenably Vague and Contradicts
the Distinction Made by this Court in Park Knoll Associates with Respect to
Judicial and Nonjudicial Proceedings
Similarly, the failure of the First Department to consider the most
established of precedent has created manifest illogic with respect to the timing and
nature of the ultimate commencement of proceedings.
While underscoring the paramount importance of limiting the applicability
of the absolute immunity doctrine, this Court in Park Knoll Associates surveyed
the law, and reiterated inter alia its ancient holding in Youmans v. Smith (1897):
…a lawyer has immunity for defamatory words spoken
in a judicial proceeding but not for words spoken while
representing a client in a nonjudicial proceeding (see
Youmans v. Smith, 153 N.Y. 214, 47 N.E. 265; Simon v.
Stim, 11 Misc.2d 653, 176 N.Y.S.2d 475, affd. 10 A.D.2d
647, 199 N.Y.S.2d 405 [pretrial statements]; cf. Andrews
33
v. Gardiner, 224 N.Y. 440, 121 N.E. 341, supra [a
pardon application])…
Park Knoll Associates v. Schmidt, 59 N.Y.2d 205, 209,
451 N.E.2d 182, 184 (1983).
This distinction is critical, because if defamatory statements made by an
attorney are not absolutely privileged when made in a nonjudicial proceeding, how
could defamatory statements made by an attorney be absolutely privileged when
there are no proceedings?
Again, the untenably vague nature of applying blanket immunity to
statements made in the context of “prospective litigation” would require a court,
generally in the context of pre-answer motions to dismiss, where relatively few
facts are at its disposal, to ascertain the circumstances of the defamatory
publication and determine the nature of potential proceedings, and the pertinence
of such statements to such proceedings.
What if, for example, the only defamatory statements in the Kimmel letter
involved Mr. Khalil’s immigration application and status…and no litigation had
commenced before Mr. Khalil sued for libel per se? Would the court have guessed
at the potential nature of proceedings that might have been brought with respect to
immigration issues? Would such proceedings be judicial or nonjudicial in nature?
Further, in this case, litigation not only had not been commenced on the day
that the Kimmel letter was sent, but it was not commenced for more than six (6)
34
months after its publication. At any time during that six-month period,
presumably, the Third-Party Defendants-Respondents, if sued for defamation,
would have only been entitled to invoke qualified privilege, not absolute privilege.
Would they have argued that they could commence an action after they had been
sued for defamation and thus be retroactively entitled to claim absolute immunity?
Put another way, the First Department’s holding, contrary to this Court,
other Appellate Division Departments and settled law, would encourage the
commencement of litigation as a defense to defamation claims. However, that
concept is prohibited:
…where a party has manipulated the legal process or
initiated litigation for the purpose of defaming another,
the privilege is lost.
Mintz & Gold LLP v. Zimmerman, 17 Misc. 3d 972, 977-
78, 848 N.Y.S.2d 814, 819 (N.Y. Sup. Ct. 2007) aff'd, 56
A.D.3d 358, 869 N.Y.S.2d 394 (1st Dept. 2008); see also
Savage Is Loose Co. v. United Artists Theatre Circuit,
413 F.Supp. 555 (S.D.N.Y. 1976).
In sum, there is no discernable rationale in favor of the First Department’s
“prospective litigation” concept – and of course none has been articulated by that
court – while the consequences of its deviation from precedent and the policy
considerations expressed by this Court are readily apparent.
Indeed, the circumstances at bar illustrate how allowing an attorney
unfettered power to use defamatory statements as a weapon to quash potential
35
competition of his client cannot be a good idea. The fact that there were no
pending judicial proceedings exacerbated the negative impact of the Kimmel letter;
Mr. Khalil and the U.K. Defendants had no attorney at the time they were
ingenuously planning a new business venture in New York and were confronted by
an imposing, intensely threatening letter from a New York attorney accusing Mr.
Khalil of crimes, unethical behavior and illegal immigration status.12
No reasonable policy objectives are promoted by allowing an attorney
unlimited power to use defamatory communications as a sword, outside the ambit
of judicial proceedings, so that the attorney can in essence be hired as a henchman
to intimidate a client’s perceived competition.
The Appellate Order Glossed Over Issue Finding and the Inherent Issue of
Fact of Determining Malice and Intent on a Pre-Answer Motion to Dismiss
Khalil was further prejudiced by the court below having failed to apply basic
principles of construction before summarily dismissing the Third-Party Complaint.
For example, inasmuch as malice involves the individual’s subjective state
of mind, it is unsuitable to being resolved by motion, as malice is “a fact question
12 Whereas, for example, the First Department in Sexter & Warmflash, P.C. v Margrabe, 33
A.D.3d 10, 817 N.Y.S.2d 37, 828 N.Y.S.2d 315 (1st Dept. 2007), referenced, in dicta, “a letter
among parties and counsel on the subject of pending or prospective litigation” as warranting
privilege, the lack of pending judicial proceedings in this case – and, it would be expected, in
most cases – would imply a lack of involvement of counsel for the defamed party, as was the
case here with Mr. Khalil and the U.K. Defendants. Such individuals are thus put at a
disadvantage when faced with hostile communications from an attorney.
36
hinging on defendant's state of mind which is not usually amenable to summary
judgment.” Rinaldi v. Viking Penguin, 52 N.Y.2d 422, 437–438, 438 N.Y.S.2d
496, 420 N.E.2d 377 (1981). On the pre-answer motion to dismiss the Third-Party
Complaint, such a determination was all the more inappropriate.
The Appellate Order offered only the conclusory statement that, with respect
to the Third Cause of Action in the Third-Party Complaint, for tortious interference
with business relations, “even viewed in the liberal light required on a motion to
dismiss pursuant to CPLR §3211, the third-party complaint and the documentary
evidence fail, absent the libel claims, to allege the “malice” or use of “improper or
illegal means” required to state a cause of action for tortious interference with
business relations.”
However, the court was charged, on a motion to dismiss, simply to glean a
potential cause of action:
In deciding a motion to dismiss, the court must consider
whether there can be fairly gathered from all of the
factual allegations a legally cognizable cause of action …
All facts alleged in the pleading must be accepted as true,
and the court must accord a plaintiff the benefit of every
possible favorable inference … “The motion should be
denied if ‘from [the pleading's] four corners factual
allegations are discerned which taken together manifest
any cause of action cognizable at law.’ ”
Small v. Lorillard Tobacco Co., Inc., 176 Misc. 2d 413,
418, 672 N.Y.S.2d 601, 606 (Sup. Ct. 1997) rev'd, 677
N.Y.S.2d 515 (App. Div. 1998) superseded, 252 A.D.2d
1, 679 N.Y.S.2d 593 (1998) aff'd, 94 N.Y.2d 43, 720
37
N.E.2d 892 (1999) and order recalled and vacated sub
nom. Small v. Lorrilard Tobacco Co., Inc., 252 A.D.2d 1,
681 N.Y.S.2d 748 (1998) and rev'd, 252 A.D.2d 1, 679
N.Y.S.2d 593 (1998) aff'd, 94 N.Y.2d 43, 720 N.E.2d
892 (1999) [citations omitted]
Even assuming arguendo that an attorney enjoys an absolute privilege under
any circumstances to make defamatory statements, and thus the conduct of Third-
Party Defendants-Respondents is to be deemed lawful, the facts alleged still
manifest a cognizable cause of action in prima facie tort:
The requisite elements of a cause of action for prima
facie tort are (1) the intentional infliction of harm, (2)
which results in special damages, (3) without any excuse
or justification, (4) by an act or series of acts which
would otherwise be lawful.
Freihofer v. Hearst Corp., 65 N.Y.2d 135, 142-43, 480
N.E.2d 349, 355 (1985).
It is respectfully submitted that, if absolute privilege were to be applied so as
to render Mr. Kimmel’s defamatory statements “lawful,” then all of the elements
of a prima facie tort can be gleaned within the four corners of the Third-Party
Complaint – particularly with all allegations deemed true and every inference
afforded Third-Party Plaintiff-Appellant on a motion to dismiss.
Clearly it is plausible that Mr. Kimmel acted maliciously to attempt to derail
the new Eckersley O’Callaghan entity that was to be formed in New York. Such
allegations should not only have been deemed true on a pre-answer motion to
dismiss, but the intentional infliction of harm is clearly potentially actionable. The
38
court below simply did not afford Third-Party Plaintiff-Appellant every possible
inference in construing the Third-Party Complaint, and it is respectfully submitted
that it was error for it to summarily dismiss such pleading.
There is a substantial reason to believe that the Third-Party Defendants-
Respondents were motivated in significant part by malice. Yet the Appellate Order
failed completely to consider the gratuitous nature of the defamatory statements
made concerning Mr. Khalil’s immigration application and status and the question
of pertinence, and avoided any legal or equitable analysis of such facts before it.
CONCLUSION
As outlined above, the Appellate Order represents a fundamental change in
New York law with respect to applicability of the doctrine of absolute privilege to
defamatory statements made when no judicial proceedings are pending. This
change was made subtly, through repetition of erroneous dicta, without the court
having made any pronouncement or having provided any analysis of previous law
or any rationale for departing from settled law. Clearly, the First Department
stands alone in this regard, and thus conflicts with other Appellate Division
Departments. It is therefore respectfully submitted that this Court should resolve
such conflict, and confirm that the doctrine of absolute privilege should continue to
be limited, in accordance with strict public policy, to defamatory statements made
only in the context of pending judicial proceedings.
Accordingly, the Appellate Order should be reversed, the Third-Party
Complaint should be reinstated, and Mr. Kimmel and his firm, as proper third-
party defendants, should be disqualified from further representation of the plaintiff
in this matter.
Dated: Rye, New York
March 17, 2014
39
Respectfully submitted,
THE MARANTZ LAW FIRM
Attorneys for Third-Party Plaintiff-
Appellant
150 Theodore Fremd A venue
Suite A-14
Rye, NY 10580
(914) 925-6700
By:~