Litigation Privilege Does Not Extend to Communications to Non-Party That Are Unrelated to the Litigation

On October 27, 2020, the First Department issued a decision in 3P-733, LLC v. Davis, 2020 NY Slip Op. 06043, holding that the litigation privilege does not extend to communications to a non-party unrelated to the litigation, explaining:

Defamation is the making of a false statement which tends to expose the plaintiff to public contempt, ridicule, aversion or disgrace, or induce an evil opinion of plaintiff in the minds of right-thinking persons, and to deprive plaintiff of their friendly intercourse in society. To prove a claim for defamation, a plaintiff must show: (1) a false statement that is (2) published to a third party (3) without privilege or authorization, and that (4) causes harm, unless the statement is one of the types of publications actionable regardless of harm. The application of privileged status to communication made by attorneys during the course of litigation is also relevant to pre-litigation communication. However, releasing such a letter or its contents to unrelated third parties could affect the availability of the privilege.

Here, the August 22, 2017 letter sent by CPG Invest's lawyer to 3P containing specific allegations of misappropriation of CPG's funds by Bhardwaj and 3P, and expelling 3P from the joint venture based on such conduct, was allegedly provided by Davis to an unrelated third party investment company in Colorado, who subsequently canceled a large prospective real estate deal with Bhardwaj. Although the August letter, when initially sent to Bhardwaj and 3P was covered by the litigation privilege, the release of the letter to a third party, entirely unrelated to that litigation, negated the privilege.

(Internal quotations and 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.