Litigation Privilege Protects Client’s Statement That His Former Lawyer Was a Liar, Thief, and “No Good Drunk”

 by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Privilege (pd)Anyone who has practiced law for any period of time likely has a story about a misdirected email. You know, the one you meant to send to a client or a colleague, but it went to your adversary or your supervising partner instead. These situations often just result in mild to moderate awkwardness around the office, but they sometimes create bigger problems. MacNaughton v. Harmelech, a recent decision from the Appellate Division, involved the latter. But it also involved the litigation privilege, something I wrote about just a few weeks back. (What Do eBay, The "40 Year Old Virgin," And The Litigation Privilege Have In Common?). And, fortunately for defendant, the statements in his misdirected email were protected by that privilege.

In MacNaughton, plaintiff, a New Jersey lawyer, represented defendant in a lawsuit involving defendant's company. Defendant disputed plaintiff's bill and plaintiff eventually sued defendant over the bill. At some point during the litigation, the trial court asked the parties whether they were interested in mediation. Around the same time, however, plaintiff was "in contact with another of defendant's creditors about banding together to force defendant into involuntary bankruptcy." As you might expect, when defendant learned about plaintiff's efforts, it colored his decision about whether to agree to mediation. In fact, defendant sent the following email, reprinted exactly as it appeared in the Appellate Division's decision, to his lawyers on the subject:

Please I Am asking you to file a paper in the state court there WILL NOT BE AGREE NOT TO BE A MEDIATION MACNAUGHTON CALL TODAY AND ASK HIM TO TRY TO POT ME IN IN VALENTRY BANKRUPTCY AS YOU SEE HE IS A. LIAR THIEF AND NO GOOD DRUNK

NO TO BE TRUSTED THANKS

Unfortunately, defendant also copied plaintiff on this email. Upon receiving it, plaintiff filed a one-count complaint for defamation. The trial court held a hearing on whether the statements were protected under the litigation privilege. After taking testimony from defendant and his current counsel, the court applied the four-factor test from Hawkins v. Harris, and held that they were. As a result, plaintiff's claim was dismissed. Plaintiff appealed.  

The Appellate Division affirmed the trial court's decision. It observed that the litigation privilege "grows out of the strong public policy that persons in [litigation] be permitted to speak and write freely without the restraint of fear of an ensuing defamation action." The privilege is broad and absolute, protecting not just statements made in court or in pleadings, but "all statements or communications in connection with the judicial proceeding," including private communications between a party and the party's lawyer about litigation. With this as a backdrop, the Appellate Division then held that "[d]efendant's email to his lawyers directing them to refuse mediation with plaintiff obviously [fell] squarely within those statements protected by the litigation privilege."

The Appellate Division rejected plaintiff's argument that the trial court erred because "defendant's genuine belief in the truth of the statement is a finding of fact that should have been made by a jury." It held that whether defendant genuinely believed the statements in his email was "irrelevant."  Rather, "[a]ll that matter[ed] [was] that [defendant] made the statement to his lawyers in the course of directing them in the conduct of the case."

The Appellate Division also rejected plaintiff's argument that defendant's statements were not protected under the litigation privilege because they "related only to plaintiff''s honesty and not to the merits of the lawsuit." The Appellate Division held that this argument "ignore[d] that defendant was speaking to his lawyers about whether he would participate in court-sponsored mediation." As a result, there was a direct connection between the statement and the litigation. Emphasizing the broad scope of the litigation privilege, the Appellate Division further noted that courts do not "make paper-fine distinctions when analyzing whether a potentially privileged statement 'relates' to a judicial proceeding." Rather, courts interpret relevancy "broadly and liberally to avoid having the speaker act at his peril, at the cost of the policy considerations underlying the privilege."

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