On Sept. 12, 2017, the Second Circuit held that a defendant-employer’s statement, issued in response to litigation, that the plaintiff-employee had “repeatedly tried to extort money from the company” and was “dismissed for gross misconduct,” could serve as the basis for a claim for defamation. Friedman v. Bloomberg, No. 16 Civ. 1335, 2017 WL 3995825 (2d Cir. Sept. 12, 2017). Friedman represents a departure from a long line of decisions that have held that similar statements made by employers in response to litigation were rhetorical, nonactionable expressions of opinion. The implications of Friedman are wide ranging, and the holding is likely to create headaches for employers and outside counsel when deciding how to respond to litigation. This article breaks down the state of the law and provides advice for employers and litigators on crafting statements in response to litigation.
Background
Dan Friedman was hired in November 2011 by Dutch asset management firm, Palladyne. Friedman worked for Palladyne until February 2012, at which time he alleges that he was fired after raising concerns about Palladyne’s investment activities. In March 2014, Friedman sued Palladyne for, inter alia, fraudulent inducement. On March 27, 2014, Bloomberg published an article about the lawsuit. The article contained the following statement from Palladyne: “These entirely untrue and ludicrous allegations [by Friedman] 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.” Friedman then filed a second action, for defamation, against Bloomberg and Palladyne, among other defendants.
