Are statements by attorneys prior to the commencement of litigation privileged? A split between the Departments of the Appellate Division brought to the Court's attention the case of Front, Inc., vs. Philip Khalil, decided February 25, 2015, in which an employee sued his former employer and the former employer's attorney for libel.
The libel claim arose from a cease and desist letter written by the former employer's attorney that accused the employee of stealing proprietary information from the former employer as well as accusing him of a host of other misconduct. The letter demanded, among other things, that the employee cease and desist from using the former employer's confidential and proprietary information, that he return the proprietary information he had allegedly taken and finally, that the employee refrain from contacting the clients of the former employer. The employee's current employer received a similar letter as well.
After the employee failed to comply with the demands of the cease and desist letter, the former employer filed a lawsuit against the employee for breach of employment contract and other violations of the employment relationship. Apparently feeling miffed that the cease and desist letter did not couch the accusations as "upon information and belief," but rather as statements of fact, the employee then sued his former employer accusing them and their attorney of libel.
Statements made in the course of litigation are entitled to absolute privilege -- absolutely. Thus, even if a party makes a statement with actual malice (e.g.) knowing that the statement is false or making the statement with reckless disregard to whether it is false or not, that party cannot be prosecuted for defamation, libel or slander. The policy behind the absolute privilege of communications during litigation is to encourage unrestrained exchanges between adversaries and their attorneys with the hope that the more honest and unrestricted the communication, the sooner the litigation reaches a conclusion (e.g.) settlement.
While noting that the rationale supporting the application of privileged status to communications made by attorneys during the course of litigation applied to pre-litigation communication as well, the Court stopped short of giving absolute privilege to pre-litigation communications fearing the potential for abuse by attorneys who may seek to "bully, harass, or intimidate their client's adversaries by threatening baseless litigation or by asserting wholly unmeritorious claims."
Instead, the Court found a middle ground and created a qualified privilege for pre-litigation communication. The privilege is 'qualified' in that it only applies to those statements made in good-faith anticipation of litigation. Statements made other than in anticipation of litigation will face the normal scrutiny applied in defamation cases.
In the case before the Court, the judges ruled that the cease and desist letters to the employee and his current employer were indeed prepared in anticipation of litigation, and that litigation followed shortly after the letters were sent. Finding the letters to be protected by privilege, the Court dismissed the libel claim of the employee. In this pre-litigation context, the Court took time to warn attorneys from taking advantage of unrepresented parties when making pre-litigation communications: "ttorneys exercise caution when correspond with unrepresented potential parties who may be particularly susceptible to harassment ad unequipped to respond properly even to appropriate combinations from an attorney."
The entire decision can be read here.