In prior months, I have discussed cases involving businesses pursuing lawsuits against former employees due to perceived violations of, among other things, non-compete and/or non-disclosure agreements, as well as alleged misappropriation of trade secrets. While the former employer is usually the one to commence the lawsuit, there are times when the former employee may also fight back with claims of his or her own. This is exactly what happened in a recent case out of the New York County Commercial Division. Luckily for the employer, certain of the former employee’s claims were dismissed.
In the case of International Publishing Concepts, LLC v. Locatelli (J. Bransten), International Publishing Concepts, LLC (“IPC”) commenced a lawsuit against one of its former salespeople, Thierry Locatelli (“Locatelli”). IPC is a company that publishes books and magazines for placement in hotels. IPC generates revenue by selling advertising within the publications themselves. Locatelli was a salesperson for IPC for approximately five years, beginning in 2007, and generated significant revenue for IPC during the time he was employed.
In mid-2012, Locatelli left IPC and allegedly began to compete against the company, which led to a significant drop in sales. IPC alleged that Locatelli used similar materials in an effort to mislead IPC’s clients to do business with him instead. IPC commenced the lawsuit against Locatelli alleging claims for breach of fiduciary duty, fraud, unjust enrichment, tortious interference, unfair competition, and theft of corporate opportunity. After IPC commenced the lawsuit against Locatelli, Locatelli served an Answer containing counterclaims against IPC for defamation, among other things. Locatelli alleged that IPC forwarded several disparaging emails and letters to Locatelli’s clients, which caused him to lose business and damaged his reputation. Locatelli also commenced a third party action against the president and CEO of IPC for the same defamation claim as alleged against IPC.
As it turns out, the letters that were forwarded to two of Locatelli’s clients by email were actually letters from IPC’s counsel in this lawsuit. The first letter was originally sent to IPC’s President and addressed the firm’s analysis of the claims against Locatelli and provided the firm’s recommendations as to what claims and relief to pursue. [As an aside, it is unclear if the law firm was okay with its client sending out an attorney-client privileged communication, but it is not something that would be recommended regardless of intent.] The second letter was a “cease and desist” letter from IPC’s counsel to Locatelli which essentially restated the legal claims against Locatelli for engaging in violative conduct. It was these letters and the emails forwarding them that formed the basis for Locatelli’s defamation counterclaim and third party claim.
IPC and IPC’s President sought to dismiss the defamation counterclaim and third party claim respectively, among other relief. In reviewing the defamation claim under New York law, the Court noted that Locatelli would have to establish that there was “(1) a false statement, (2) published without privilege or authorization to a third party, (3) constituting fault as judged by, at a minimum, a negligence standard, and (4) it must either cause special harm or constitute defamation per se.” Frechtman v. Gutterman, 115 A.D.3d 102, 104 (1st Dep’t 2014).
The Court ultimately held that the defamation claim must be dismissed because the statements contained in the letters and forwarding emails were protected by “absolute privilege,” “qualified privilege,” and were also non-actionable statements of opinion rather that actionable assertions of fact.
The Court held that the absolute privilege applied because the statements made in the letters were made by individuals participating in a public function such as a judicial proceeding. Because the statements made were pertinent to the litigation, absolute privilege applied and the defamation claim could not stand.
The Court held that qualified privilege also applied because both parties (the communicating party and the receiving party) had an interest in the communications and Locatelli could not establish that the communications were made with spite or ill will or with knowledge that the statements were false or made in reckless disregard for the truth.
Lastly, the Court held that the statements in the letters were merely non-actionable opinions rather than actual assertions of fact. Considering that the letters merely contained statements of IPC’s lawyers’ beliefs and opinions, rather than statements of fact, the defamation claims were dismissed on that ground as well.
While the defamation claim was ultimately dismissed here, it is important that any business in this type of situation consult with its attorneys before sending out potentially inflammatory communications, especially attorney-client privileged communications. The claims asserted by Locatelli, which include tortious interference claims that were not part of the motion to dismiss, potentially could have been avoided if IPC sought the advice of its counsel before forwarding letters to Locatelli’s clients. It is unclear if IPC consulted with its attorneys here, but it does not appear so based on the facts presented by the Court.