Public Statements About Ongoing Litigation
Can Lead to Defamation Claims
Speaking publicly about ongoing litigation can help attorneys and their clients win public support for their side of a dispute. A recent decision by the U.S. Court of Appeals for the Second Circuit, however, reminds litigants that in attempting to win over the public in ongoing litigation, attorneys and clients also expose themselves to potential defamation claims.
In Friedman v. Bloomberg, 871 F.3d 185 (2d Cir. 2017), 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. In 2014, Friedman sued Palladyne in Connecticut federal court alleging that he had been fired in 2012 for voicing concerns that Palladyne was not engaging in legitimate investment activities. Friedman had claimed the company was a “kickback and money laundering operation” for the regime of former Libyan dictator Muammar al-Gaddafi.
Two days after Friedman filed his lawsuit, Bloomberg published an online article about the lawsuit titled “Palladyne Accused in Suit of Laundering Money for Qaddafi.” The article contained statements from Palladyne and from Friedman’s attorney. In its statement, Palladyne said that “these entirely untrue and ludicrous allegations [in Friedman's 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 quoted statement was defamatory. After the defendants moved to dismiss the claims, 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 on jurisdictional grounds.
On appeal, the Second Circuit affirmed the district court’s dismissal of claims against Palladyne and its PR firm, but reversed the district court’s dismissal of the claims against Bloomberg. The appellate court held that Palladyne’s statement that Friedman “had repeatedly tried to extort money from the company” could, as a matter of law, give rise to a defamation claim. The court held that a reasonable reader could interpret Palladyne’s use of “extort” to be more than simply “rhetorical hyperbole,” as the district court had held. “Rhetorical hyperbole” is a category of speech that does not give rise to a defamation claim because it cannot reasonably be interpreted as stating actual facts. The Second Circuit ruled that Palladyne’s statement could be read as something more than a hyperbolic characterization that the lawsuit was an attempt to extort money. Instead, a jury could reasonably read the statement to mean that Friedman actually committed the crime of extortion. Thus, this latter reading could lead to a defamation claim because when it is read in this light, the statement contains facts that can be proven false. The court noted that because Palladyne said in its statement that Friedman was “dismissed for gross misconduct,” a reasonable reader could have believed that such misconduct included the multiple attempts to “extort” money.
The Second Circuit further held that even if a reasonable reader could interpret the use of “extort” here as hyperbole concerning Friedman’s actions and not a factual statement that he committed a specific crime, in this context the statement could still lead to a defamation claim. Palladyne’s statement refers to previous attempts to “extort” money, but Palladyne did not explain what it meant by “extort.” Generally speaking, a statement of opinion can give rise to a defamation claim when the statement implies that the speaker knows certain unflattering facts about the statement’s subject that the audience does not know and that support the speaker’s opinion. In this instance, Palladyne’s statement can be read to imply that there are undisclosed facts about Friedman that would be detrimental to his character. In light of these holdings, the Second Circuit remanded the case 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.
So what should attorneys and clients do differently now that Friedman is the law of the land in the Second Circuit—and surely persuasive authority for other circuits? Absolutely nothing. There is nothing earth shattering about the proposition that there could be legal consequences for parties who make defamatory public statements about ongoing litigation. Attorneys who are familiar with engaging the court of public opinion in connection with client matters know this risk. Friedman is the equivalent of a public service announcement from the Second Circuit reminding attorneys and litigants of this risk.
Recognition of this risk, however, should not be an excuse for attorneys to avoid speaking publicly on behalf of their clients when circumstances warrant. For every court filing, an attorney is technically at risk for being sanctioned. That doesn’t stop attorneys from making those filings. Every legal complaint is technically at risk of being dismissed before trial. That doesn’t stop attorneys from filing complaints. Instead, attorneys do all that they can to ensure that their court filings are not sanctionable and that their complaints are dismissal-proof.
So, too, should attorneys do all that they can to ensure their public statements about ongoing litigation are not defamatory. Attorneys should review, and be familiar with, the elements of a defamation claim in the jurisdictions where they practice. While there is no substitute for that legal research, generally speaking, in light of Friedman, attorneys could ask themselves the following questions to help determine if a planned public statement about ongoing litigation could give rise to a defamation claim:
Does the public statement have to address the actions of an adversary? Can the attorney make his or her point just as effectively by instead focusing on the attorney’s own client or some general societal wrong?
If the statement concerns an adversary, is it the kind of statement a reasonable reader would consider to be a factual statement
If so, is it truthful?
If the statement is intended to be hyperbole, is it exaggerated or over-the-top hyperbole that no reasonable reader would interpret it as a factual statement? For example, “Instead, Mr. Turner managed the difficult feat of having his head in the clouds while it was simultaneously buried in the sand.”
If the statement is intended as an opinion, does the statement also include the facts upon which the opinion is based? For example, “Between the allegations in this complaint and his public history of misconduct at other companies, one would think that Mr. Hooch is a leading candidate for the ‘Worst Boss of the Year’ award.”