Hyperbole Not Defamatory

The New York Appellate Division for the First Judicial Department affirmed the dismissal of a defamation claim against a law firm

Plaintiff alleges, inter alia, that he was defamed by defendants in interviews with journalists, an article, and press releases in which defendants made comments about litigation between him and Elizabeth Elting, whom they represented. Plaintiff and Elting co-founded a Delaware company and had litigated for years over control of the company. Most recently, a Delaware court had granted Elting’s petition for the appointment of a custodian to sell the company to resolve the deadlock between her and plaintiff. In its August 13, 2015 post-trial decision, the court mentioned Elting’s pending motion for sanctions against plaintiff, which the court said “raises very serious issues of spoliation and discovery abuse.” In its July 20, 2016 decision on the sanctions motion, the Delaware court imposed sanctions against plaintiff equal to Elting’s costs on the sanctions motion and one third of her litigation costs for the entire case, a total of more than $7 million.

The statements at issue

Defendants’ comment about plaintiff’s “massive spoliation” or “spoliation in droves” is protected under Civil Rights Law § 74 as a fair and true report, even if the Delaware Chancery Court did not use defendants’ exact words in its decision (see Holy Spirit Assn. for Unification of World Christianity v New York Times Co., 49 NY2d 63, 67 [1979]; see also Russian Am. Found., Inc. v Daily News, L.P., 109 AD3d 410 [1st Dept 2013], lv denied 22 NY3d 856 [2013]). The court concluded that plaintiff had intended and attempted to destroy “a substantial amount of information,” and detailed plaintiff’s responsibility for the deletion, in violation of court order, of approximately 41,000 files from his computer. Plaintiff argues that defendants overstated the matter, because his spoliation proved largely reversible. Indeed, of the 41,000 files deleted, 1,000 were permanently destroyed. However, plaintiff did not cause the recovery of the data; rather, it occurred in spite of him. Moreover, he lied under oath about his spoliating conduct. As the court observed, an unsuccessful spoliator is still a spoliator (see TR Invs., LLC v Genger, 2009 WL 4696062, *9, 2009 Del Ch LEXIS 203, *28 [Del Ch 2009], affd 26 A3d 180 [Del 2011]; see also Victor Stanley v Creative Pipe, Inc., 269 FRD 497 [D Md 2010]).

Defendants’ comment that plaintiff was “holding Elting hostage” is protected under Civil Rights Law § 74. During the interviews at issue, defendants cited the section of the post-trial decision in which the court used similar language in summarizing Elting’s position (see Greenberg v Spitzer, 155 AD3d 27, 52 [2d Dept 2017]). Defendants’ statement that “no rational person would ever want to partner with [plaintiff],” which is nearly a verbatim quotation from the court’s decision, is protected under the statute.

Plaintiff argues that defendants’ comment that “[s]ome of the stuff, which I’m not at liberty to share with you, is so egregious that it really makes the jaw drop” should not have been found to be nonactionable opinion (see Sprecher v Thibodeau, 148 AD3d 654, 656 [1st Dept 2017] [“comments made to the media by a party’s attorney regarding an ongoing lawsuit constitute nonactionable opinions”]), because it suggests that the comment is based on undisclosed defamatory facts (see e.g. Restatement [Second] of Torts § 566]). However, the complaint does not allege, as required, that the words of which plaintiff complains are defamatory (see CPLR 3016[a]). In any event, in context, the comment can reasonably be read as part of defendants’ nonactionable prediction about the sanctions decision. Moreover, it is largely nonactionable hyperbole.

Another failed claim

Supreme Court correctly dismissed the tortious interference with prospective business relations claim because the complaint fails to allege that plaintiff had a relationship with Bank of America with which defendants interfered. It contains conclusory allegations about a potential relationship, which is insufficient (BDCM Fund Advisor, L.L.C. v Zenni, 103 AD3d 475, 478 [1st Dept 2013]). Nor does the complaint allege, as required, that but for defendants’ conduct plaintiff would have had an economic relationship with the bank (Vigoda v DCA Prods. Plus, 293 AD2d 265 [1st Dept 2002]).

Forbes reported on the underlying dispute. (Mike Frisch)