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August 2019: QE Scores Another Defamation Win; Decision Clarifies Scope of Damages Discovery

August 2019

The firm recently secured a victory in New York state appellate court, creating new precedent regarding the scope of discovery a defendant may seek regarding a plaintiff’s damages claim in a defamation action.  The decision affirmed the trial court’s 45-page decision, which was based on voluminous cross-motions to compel complete document productions.  See Gottwald v. Geragos, 61 Misc.3d 1214(A) (N.Y. Sup. Ct. 2018); id., 172 A.D.3d 445 (1st Dep’t 2019).  Under this precedent, a defendant accused of defamation may seek discovery concerning the plaintiff’s past reputation, including any previous claims made against the plaintiff or evidence of “prior bad acts” that are similar in nature to the subject matter of the alleged defamatory statements.  Additionally, the decision clarifies that defamation defendants may seek discovery regarding the plaintiff’s financial history, even where the plaintiff purports to disclaim any economic damages.

The firm persuaded the trial court that a libel plaintiff may not assert reputational damage while withholding discovery that bears on whether the reputation was good or bad prior to the alleged defamation.  The Court noted the absence of “factually on-point precedent holding that [the C.P.L.R.] invariably permits the liberal discovery of ‘prior acts’ evidence of a defamation plaintiff’s reputation.”  Gottwald, 61 Misc.3d 1214(A) at *14.  But the Court was persuaded that even if a plaintiff’s prior bad acts may not be admissible at trial, they are “nevertheless subject to discovery before trial.”  Id.  Accordingly, the Court upheld requests for documents that concerned claims by any individual against the plaintiff of the nature at issue in the alleged defamatory statements.  On appeal, the firm prevailed again over the plaintiff’s objection that such evidence may not be discovered because it is not admissible.  The First Department found plaintiff’s arguments “unavailing.”   Gottwald, 172 A.D.3d 445.

The trial court also held that a defamation plaintiff’s financial history is relevant and discoverable, even where the plaintiff purports to disclaim so-called “special damages.”  Gottwald, 61 Misc.3d 1214(A) at *15-16.  In defamation, a statement is defamation per se where it “charge[s] plaintiff with a serious crime,” and in such cases, the “plaintiff need not allege or prove ‘special damages,’” which consist of, for example, lost profits or direct economic loss.  Id. at *15.  Rather, a plaintiff in such a case may recover general damages (e.g., for embarrassment), which are presumed.  Id.  The plaintiff argued that because he did not seek damages for “lost profits,” his financial history was irrelevant.  The trial court, however, disagreed, and found even though “the existence of compensatory damages is presumed, the quantum of such damages is not, and the party who made the defamatory statement … must be permitted to rebut the presumption and disprove the amount of damages sought to be recovered.”  Id. at *1.  In other words, a defamation defendant may seek to show that the plaintiff suffered no economic harm in mounting a case that the plaintiff suffered no damages, even where the plaintiff does not seek to recover for specific economic harm.  The appellate court again affirmed this holding, finding the plaintiff’s arguments on this score “unavailing” as well.  Gottwald, 172 A.D.3d 445.

This precedent – which is the latest in a recent string of wins for the firm’s plaintiff- and defense-side defamation practice -- provides new tools to a defendant accused of defamation to obtain discovery  in order to disprove the plaintiff’s damages claim.