Bass, Berry & Sims attorney Chris Lazarini examined a case in which a SEC registered investment advisor sued for defamation and intentional interference with contractual relations after The Wall Street Journal published an article about a $7.9 million award in an arbitration in which the advisor was one of three respondents. The advisor alleged the article falsely reported the award had been issued against it when the award was actually issued against the other respondents. The court determined the article was “substantially accurate” and therefore was protected under the New York Civil Rights Law for publishing “fair and true” reports of judicial proceedings.
Chris provided the analysis for Securities Online Litigation Alert (SOLA). The full text of the analysis is below and used with permission from the publication.
Highland Capital Management, L.P. vs. Dow Jones & Co., Inc., No. 151322 (N.Y. Sup. Ct., NY Cty., 9/26/18)
*The New York Civil Rights Law protects those who publish “fair and true” reports of judicial, legislative, or other official proceedings.
**The statute is interpreted liberally and the publisher is immune from civil liability if the report is “substantially accurate.”
Plaintiff, a SEC registered investment advisor, sued Defendants for defamation and intentional interference with contractual relations after the Wall Street Journal published an article about a $7.9 million award in an arbitration in which Plaintiff was one of three respondents. Plaintiff alleged the article falsely reported the award had been issued against it when the award was actually issued against the other respondents. Plaintiff also alleged the article falsely portrayed it as breaching fiduciary duties to clients and attempting to cover up its misconduct by making false claims against a terminated employee. Finally, Plaintiff alleged Defendants interfered with its confidentiality agreements with current and former employees when they obtained confidential information from those persons. Defendants moved to dismiss, relying on the First Amendment and New York’s absolute privilege for publishing fair reports of judicial proceedings.
The Court grants the motion. New York’s Civil Rights Law §74 protects those who publish “fair and true” reports of judicial proceedings. The “fair and true” standard is interpreted liberally, the Court observes at the start. After reviewing the article and the arbitration decision and giving liberal construction to the complaint, the Court finds the substance of the article is “substantially accurate.” Plaintiff’s allegations, the Court explains, ignore the essence of the fair report privilege and the dual policy interest of ensuring the free flow of true information without fear of being sued and public dissemination of judicial decisions. The Court also notes the explained arbitration decision details the panel’s findings of substantial wrongdoing by Plaintiff and the absence of a requirement that the plaintiff’s side of the story be reported. On the contractual interference claim, the Court finds Defendants acted with a legitimate purpose and the alleged interference was “merely incidental” to Defendants’ exercise of their constitutional right to report newsworthy information.