Schulman v. Anderson & Co., 47 N.Y.2d 824 (1979)

A qualified privilege in defamation can be overcome by malice, which can be established by showing recklessness regarding the truth or falsity of defamatory statements.

Summary

This case addresses the standard for overcoming a qualified privilege in a defamation action. The plaintiffs sued the defendants for libel based on statements made in a letter. The Court of Appeals reversed the lower court’s grant of summary judgment for the defendants, holding that there were issues of fact as to whether the statements were relevant to the subject of the letter and whether the defendants were reckless in not ascertaining the truth of the statements before publishing them. The court emphasized that recklessness regarding the truth or falsity of a statement can establish malice, thus defeating a claim of qualified privilege.

Facts

The plaintiffs were involved in placing advertisements with the defendants for publication in newspapers. A dispute arose regarding errors in these advertisements. The defendants sent a letter to the plaintiffs’ principal addressing these errors. The letter also made reference to the status of the plaintiffs’ general payment record with the defendants, implying a poor payment history. The plaintiffs claimed this reference was defamatory.

Procedural History

The plaintiffs sued the defendants for libel. The defendants moved for summary judgment, asserting a qualified privilege. The lower court granted summary judgment in favor of the defendants. The Appellate Division affirmed. The New York Court of Appeals reversed the Appellate Division’s order and denied the defendant’s motion for summary judgment, remanding the case for trial.

Issue(s)

1. Whether the reference to the plaintiffs’ payment record was relevant to the correspondence regarding advertising errors, thereby affecting the scope of the qualified privilege.
2. Whether the defendants were reckless in failing to verify the accuracy of their records regarding the plaintiffs’ payment history before making the allegedly defamatory statement.

Holding

1. Yes, because the relevance of the statement to the subject of the communication is a question of fact to be determined at trial.
2. Yes, because whether the defendants acted recklessly in not ascertaining the correct status of the account is a question of fact, particularly considering any known delays in the defendant’s record-keeping methods.

Court’s Reasoning

The Court of Appeals reasoned that summary judgment was inappropriate because genuine issues of material fact existed. First, the court questioned whether the reference to the plaintiffs’ payment record was relevant to the discussion of advertising errors. Relevance is a key factor in determining whether a qualified privilege applies. Second, the court addressed the issue of recklessness. The court stated that even if the defendants did not act with actual malice, recklessness in ascertaining the truth of the statement could defeat the qualified privilege. The court noted that the defendants’ assertion that they believed their records were up-to-date only served to highlight the factual dispute, especially considering any known delays in their record-keeping methods. The court cited Stillman v. Ford, 22 NY2d 48, 53, affirming that qualified privilege can be overcome by malice established by showing recklessness with regard to the truth or falsity of otherwise defamatory statements. The court emphasized that resolution of these factual issues must await trial.