Court Opinion

ID: 9871208
Source: CourtListenerOpinion
Date Created: 2023-09-26 20:20:32.179777+00
Date Added: 2024-06-11T07:46:14.187535
License: Public Domain

*31Kapnick, J.
(dissenting). I respectfully dissent from the majority’s opinion, because I believe that the alleged defamatory statements to the U.S. Food and Drug Administration (FDA) were not protected by an absolute privilege, but rather by a qualified privilege, and thus I would affirm the motion court’s order.
This action stems from the February 2012 termination of plaintiffs Jeanetta Stega, Ph.D., M.S.N. (Stega or plaintiff), and Wesley Tzall, M.D.,1 from their positions with defendant New York Downtown Hospital (NYDH), now the New York and Presbyterian Hospital.
On January 27, 2012, Jeffrey Menkes, NYDH’s chief executive officer, placed Stega on administrative leave pending an investigation of her conduct. Between January 27 and February 2, 2012, NYDH’s outside counsel performed an allegedly flawed investigation. According to plaintiff, NYDH wrongly concluded that she had a conflict of interest arising from her role as chairperson of its Institutional Review Board (IRB) when the IRB considered the Luminant study. On February 2, 2012, Anthony Alfano, NYDH’s chief operating officer, terminated her employment in the presence of Stephen G. Friedman, M.D., NYDH’s acting chief medical officer, and Chad Harris, NYDH’s chief compliance officer. On March 6, 2012, Stega and Tzall, who was also terminated from the IRB, filed a formal complaint with the FDA, because they were concerned that the patients in research protocols overseen by the IRB would not be properly supervised.
On May 22, 2012, in response to Stega and Tzall’s complaint, and as part of the FDA’s investigation, an FDA investigator performed an onsite inspection of NYDH, and met with Dr. Friedman, who explained the reasons for Stega’s termination.
In particular, Stega alleges in this action, Dr. Friedman informed the FDA inspector that (1) “Stega had created the Stega Research Group, using her home address, and that funds from the sponsor for the Luminant study were ‘channeled to the Stega Research Group’ (2) “Stega had requested of Far-ber, the then PI for the Luminant study, to add a patient with prostate cancer to the Luminant study”; (3) when Farber told Stega that the IRB would not approve bringing in that patient, “according to Farber, Stega said: T am the IRB and I want the patient entered’ (4) “[A] 11 of the IRB’s approvals of studies *32when [Stega] was Chairperson were ‘tainted’ and (5) “therefore, the Hospital had removed Stega as Chair, Tzall as Vice Chairman of the IRB, and any IRB member who had direct contact with Stega,” and, “[b]ecause the IRB officers and members were tainted,” Dr. Friedman “wanted to disband the Hospital’s IRB.”
Stega further alleges that Dr. Friedman’s slanderous statements to the FDA inspector were then republished in the FDA’s “Establishment Inspection Report,” which was sent to CEO Menkes with a cover letter, and received August 16, 2012.
The complaint, as relevant to this appeal, alleges that Dr. Friedman’s statements during the FDA investigation were false, made with malice, and were defamatory per se, because they tended to injure Stega in her profession and as a research scientist who works closely with the FDA.
NYDH’s motion to dismiss the defamation claim was premised primarily on the contention that Dr. Friedman’s statements to the FDA investigator are protected by an absolute privilege, since they were made in the course of a quasi-judicial proceeding. NYDH alternatively argued that Dr. Friedman’s statements were protected by a qualified privilege applicable to communications between people with a common interest or duty in the subject matter. Plaintiff essentially acknowledged that point, and the court denied the motion, holding that a claim of qualified privilege is to be raised as an affirmative defense and that it was premature to consider it on a motion to dismiss.2 The motion court also found that the complaint’s allegations of defamation were sufficiently specific to satisfy pleading requirements.
On appeal, defendants argue that the absolute privilege afforded to quasi-judicial proceedings applies to the FDA investigation, and immunizes Dr. Friedman’s statements. Alternatively, defendants argue that the challenged statements either are true or are protected opinion.
Plaintiff argues that the FDA investigation was not a quasi-judicial proceeding, and thus no absolute privilege applies, and that, moreover, the statements made by Dr. Friedman were defamatory, and thus Dr. Friedman and NYDH are liable for their publication.
“[Statements uttered in the course of a judicial or quasi-judicial proceeding are absolutely privileged so long as they are *33material and pertinent to the questions involved” (Herzfeld & Stern v Beck, 175 AD2d 689, 691 [1st Dept 1991], lv dismissed 82 NY2d 789 [1993], 89 NY2d 1064 [1997]). “As a matter of policy, the courts confine absolute privilege to a very few situations” (Park Knoll Assoc. v Schmidt, 59 NY2d 205, 210 [1983]). The absolute privilege affords a speaker or writer immunity from liability for an otherwise defamatory statement to which the privilege applies, regardless of the motive with which the statement was made (id. at 208-209).
“This immunity . . . has been granted only to those individuals participating in a public function, such as judicial, legislative, or executive proceedings . . . [and] is designed to ensure that their own personal interests — especially fear of a civil action, whether successful or otherwise — do not have an adverse impact upon the discharge of their public function” (Toker v Pollak, 44 NY2d 211, 219 [1978] [citations omitted]).
When applicable, the absolute privilege attaches not only to the hearing stage, but also to preliminary or investigative stages of the process (Rosenberg v MetLife, Inc., 8 NY3d 359, 365 [2007], citing Wiener v Weintraub, 22 NY2d 330, 331 [1968]).
“An administrative function is considered quasi-judicial when it is adversarial, results in a determination that derives from the application of appropriate provisions in the law to the facts and is susceptible to judicial review” (Herzfeld & Stern v Beck, 175 AD2d at 691).3
In Herzfeld, the Court of Appeals found that the New York Stock Exchange (NYSE) “clearly perform [ed] as a quasi-judicial body,” because it had established
“a comprehensive system of oversight and self-regulation . . . [and was] authorized to inquire into whether one of its members or an employee thereof should be disciplined for violating a particular section of the law or pertinent rule or regulation, a process which is adversarial in nature and affords *34the subject of the investigation due process protections, including the right to appeal” {id. [citations omitted]).
Similarly, in Rosenberg, the Court of Appeals found that the National Association of Securities Dealers (NASD), which is a self-regulatory organization, qualifies as a quasi-judicial body, and, as a result, statements made by an employer on an NASD employee termination (U-5) notice are protected by an absolute privilege (8 NY3d at 366, 368). Importantly, “NASD disciplinary determinations are subject to SEC and judicial review” {id. at 367).
On the other hand, “a statement is subject to a qualified privilege when it is fairly made by a person in the discharge of some public or private duty, legal or moral, or in the conduct of his [or her] own affairs, in a matter where his [or her] interest is concerned” (Rosenberg, 8 NY3d at 365 [internal quotation marks omitted]). If the privilege is qualified, “it can be lost by plaintiffs proof that defendant acted out of malice” (Park Knoll Assoc., 59 NY2d at 209).
In Toker, the Court of Appeals held that an alleged defamatory statement made to the New York City Department of Investigation (DOI) concerning plaintiff, who was seeking appointment to the Criminal Court, was only afforded a qualified privilege because, while the DOI could subpoena witnesses, it did not conduct a quasi-judicial hearing at which the plaintiff could challenge the defendant’s allegations. Nor did it appear that the DOI was “empowered, based upon its findings, to grant any tangible form of relief reviewable on appeal in the courts,” and, therefore, the DOI’s proceeding “lacked all of the safeguards traditionally associated with a quasi-judicial proceeding” (Toker, 44 NY2d at 222).
Here, as in Toker, the safeguards attendant to a quasi-judicial proceeding are lacking. The alleged defamatory statements were made to an FDA investigator charged with investigating complaints that the patients in research protocols overseen by the IRB were not being properly supervised. Defendants accurately argue that the FDA’s investigation could lead to a hearing on whether the IRB would be disqualified; however, such a hearing would ultimately involve the IRB and NYDH, but not Stega. While the FDA may be an administrative agency of the federal government, it does not perform as a quasi-judicial body like the NYSE, which affords the subject of the investigation due process protections, including the right to *35appeal (Herzfeld, 175 AD2d at 691), or the NASD, whose disciplinary determinations are subject to SEC and judicial review (Rosenberg, 8 NY3d at 367). Further, while the FDA regulatory scheme (see 21 CFR 10.45) provides for subsequent judicial review, it does not afford Stega, the subject of the investigation, due process protections. Therefore, regardless of the nature of the FDA’s proceeding, it would not be adversarial to Stega and would not provide a forum for her to challenge the alleged defamatory statements.
Moreover, as relied upon in applying absolute privilege in NASD U-5 termination cases, it is “significant that there are remedies available to an employee who disputes the employer’s statements” (Cicconi v McGinn, Smith & Co., Inc., 27 AD3d 59, 63 [1st Dept 2005], lv dismissed 6 NY3d 807 [2006]); specifically, an “arbitration proceeding or court action to expunge any alleged defamatory language” (Rosenberg, 8 NY3d at 368). No such remedy is available to Stega if the absolute privilege is applied here. Additionally, a finding of qualified privilege offers ample protection to the speaker, because malice must be proven, and, as with any defamation claim, truth is a complete defense. While I acknowledge the public importance of FDA investigations into potential misconduct in clinical trials such as the one conducted in this case, I do not find any policy reasons for concluding that this qualifies such an investigation as one of the “very few situations” (Park Knoll Assoc., 59 NY2d at 210) in which speakers should be afforded unlimited freedom of speech, without inquiry into malice. Here, as in Toker, “[a] qualified privilege is sufficient to foster the public purpose of encouraging citizens to come forth with information concerning [potentially] criminal [or otherwise inappropriate] activity . . . [and] [t]he protection afforded by a qualified privilege should not be cavalierly dismissed as inadequate” (44 NY2d at 221).
Notwithstanding defendants’ arguments and the majority’s statements to the contrary, the Court of Appeals’ holding in Rosenberg, and our rulings in Cicconi and Herzfeld, that the absolute privilege attaches to defamatory statements made in U-5 termination notices, have not expanded the application of absolute privilege so far as to encompass the scenario found here, where the requisite attributes of a quasi-judicial proceeding are not present.
Accordingly, I would find that the absolute privilege does not apply under the circumstances of this case.
*36Because I find that absolute privilege does not attach here, I will also address the defendants’ alternative argument that the complaint should be dismissed because the alleged defamatory-statements either are true or are protected opinion. The elements of defamation are “a false statement, published without privilege or authorization to a third party, constituting fault as judged by, at a minimum, a negligence standard, . . . caus [ing] special harm or constituting] defamation per se” (Dillon v City of New York, 261 AD2d 34, 38 [1st Dept 1999]). When a qualified privilege applies, the statements are protected unless made with malice, meaning either “spite or ill will,” or “reckless disregard of whether [they were] false or not” (Liberman v Gelstein, 80 NY2d 429, 437-438 [1992] [internal quotation marks omitted]; Frechtman v Gutterman, 115 AD3d 102, 107-108 [1st Dept 2014]).
In determining the sufficiency of a defamation pleading, the Court considers “whether the contested statements are reasonably susceptible of a defamatory connotation” (Davis v Boeheim, 24 NY3d 262, 268 [2014], quoting Armstrong v Simon & Schuster, 85 NY2d 373, 380 [1995]). “If, upon any reasonable view of the stated facts, plaintiff would be entitled to recovery for defamation, the complaint must be deemed to sufficiently state a cause of action” (Silsdorf v Levine, 59 NY2d 8, 12 [1983], cert denied 464 US 831 [1983]).
In my opinion, the complaint adequately pleads that Dr. Friedman made false statements that are “ ‘reasonably susceptible of a defamatory connotation’ ” (Davis, 24 NY3d at 268) and the motion court correctly found that the alleged defamatory statements connote that Stega misappropriated funds and improperly attempted to interfere with a clinical study, and that these statements would disparage Stega in her profession. Although the FDA report of the investigation indicated that Dr. Friedman said that he “felt” that the IRB was “tainted,” that does not render the statement a protected opinion (see Mann v Abel, 10 NY3d 271 [2008], cert denied 555 US 1170 [2009]). Since Dr. Friedman was the acting chief medical officer, his words carried authority when speaking about the IRB, and the context suggests to the average reader that his statements were based on facts (see Davis, 24 NY3d at 273).
Tom, J.R, and Andrias, J., concur with Saxe, J.; Kapnick, J., dissents in part in a separate opinion.
Order, Supreme Court, New York County, entered September 17, 2014, reversed, on the law, and the motion granted. The *37Clerk is directed to enter judgment dismissing the complaint as against said defendants.

. In the order appealed from, the motion court dismissed all claims asserted by Tzall, and he has not taken an appeal.

. It is not disputed on appeal that the defamatory statements are at least protected by a qualified privilege.

. The majority’s opinion appears to be focused on the fact that statements made outside the context of an administrative hearing may still qualify for the application of absolute privilege. I do not dispute this, and therefore find most of the majority’s opinion to be superfluous. Certain quasi-judicial elements must be present before the analysis even considers the stage at which the subject statements were made.