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Caution: Statements About Litigation Can Give Rise to Defamation Claims

Posted by Wayne Pollock on Sep 28, 2017 12:30:00 PM

Reminder: Overly aggressive public statements about ongoing litigation can give rise to their own separate defamation claims.

As lawyers and clients speak strategically about lawsuits they are involved in to gain public support, a recent decision by the U.S Court of Appeals for the Second Circuit is a reminder these statements must also be non-defamatory.

In Friedman v. Bloomberg L.P., the Second Circuit held that a public statement about a lawsuit could give rise to its own separate lawsuit for defamation. At issue in Friedman was a statement in a Bloomberg article about a lawsuit Dan Friedman filed against his former employer, Netherlands-based Palladyne International Asset Management. The statement — from Palladyne — said: “[t]hese entirely untrue and ludicrous allegations [in Friedman's earlier lawsuit] have been made by a former employee who has repeatedly tried to extort money from the company. . . . He worked with us for just two months before being dismissed for gross misconduct.”

After the article was published, Friedman filed a second lawsuit against Palladyne, its U.K.-based public relations firm (which allegedly prepared the statement), and Bloomberg, alleging that the statement was defamatory. The district court dismissed the claims against Bloomberg, holding that the statement at issue was a protected expression of opinion. The court also dismissed the claims against Palladyne and its PR firm, but due to jurisdictional issues.

On appeal, the Second Circuit reversed the district court’s dismissal of the claims against Bloomberg. The appellate court held that Palladyne’s use of the word “extort” was not simply “rhetorical hyperbole” referring to Palladyne’s view that the lawsuit was frivolous. Instead, the court held that in the context of the statement, the reference to extortion could reasonably be read to suggest that Friedman committed the criminal act of extortion — a statement that can give rise to a defamation claim because it could be proven false (unlike rhetorical hyperbole).

The court also held that the statement was not the kind of statement of opinion protected from a defamation claim because it suggested that Palladyne knew about certain facts about Friedman’s prior actions — facts unknown to readers of the article — which support its opinion. The appellate court remanded the case back to the district court so that a jury could determine whether readers understood the statement at issue here to mean that Friedman engaged in criminal conduct, and if the statement defamed Friedman.

Friedman is a reminder that there are legal consequences for parties who make defamatory public statements about ongoing litigation. When speaking publicly, lawyers and clients would be wise to keep in mind the most common types of statements that are not defamatory: truthful factual statements, over-the-top hyperbole, and statements of opinion that rely on facts discussed within the same statement. However, lawyers and clients should not view defamation concerns as a muzzle preventing them from speaking publicly about ongoing litigation. The most effective statements about ongoing litigation are strategic and persuasive, while at the same time avoiding the defamation issues that were at the heart of Friedman.

Topics: AmLaw, Big Law, Litigation PR