Testimony In Bar Discipline Case Absolutely Privileged

The dismissal of a defamation action brought as a result of statements made in a disciplinary proceeding was affirmed by the North Carolina Court of Appeals.

Lena Watts-Robinson appeals from an order dismissing her defamation action against Brandon Shelton, opposing counsel in an employment discrimination case (the “Billips action”). In her complaint, Watts-Robinson alleged that Shelton defamed her while testifying before the Disciplinary Hearing Commission of the North Carolina State Bar (“DHC”) during a hearing investigating allegations that Watts-Robinson, inter alia, mismanaged entrusted client funds and engaged in professional misconduct while representing the plaintiff-employee in the Billips action. Shelton moved to dismiss Watts-Robinson’s defamation action for failure to state a claim on the basis that his testimony during the disciplinary hearing was absolutely privileged, since it was made in the course of a judicial proceeding and was sufficiently relevant to that proceeding. After a dismissal hearing, the superior court granted Shelton’s motion and dismissed Watts-Robinson’s defamation action.

Two issues are presented in this appeal: whether Shelton’s allegedly defamatory statements made during the disciplinary hearing before the DHC were absolutely privileged from civil action, and whether the trial court erred by refusing to exclude the resulting discipline order disbarring Watts-Robinson from practicing law (“disbarment order”) on the basis that its prejudice outweighed its probative value. We hold Shelton’s challenged statement was absolutely privileged and the superior court properly refused to exclude the disbarment order. Accordingly, we affirm.

The plaintiff was disbarred and based the defamation claim on testimony presented at the hearing

..central to the subject matter of Watts-Robinson’s disciplinary hearing was her alleged mismanagement of entrusted client funds, including the settlement proceeds from the Billips action. Considering the entire exchange in context, Shelton’s response to questioning that he was concerned “Watts-Robinson was potentially trying to run some kind of scam on Mr. Billips” after she requested the settlement check be reissued in a manner that would permit her to deposit the check into her own bank account, because she was concerned Billips would not reimburse her for some expense, was sufficiently relevant such that it was not palpably irrelevant to the subject matter of the disciplinary proceeding.

Accordingly, Shelton’s testimony during the disciplinary hearing was absolutely privileged, and the trial court properly granted his motion to dismiss under Rule 12(b)(6) for failure to state a claim.

Further, it was not error to admit the disbarment order into evidence. (Mike Frisch)