In a decision sure to be applauded by publically traded corporations, the Supreme Court of British Columbia, in Merit Consultants International Ltd v Chandler, recently dismissed a defamation claim which was brought against a corporation for publically commenting on ongoing litigation in a corporate news release.
At issue in the case was a newsletter issued by a publically traded corporation. In this news release the corporation described its general intention to defend itself against an action for breach of contract and its intention to bring a counterclaim alleging negligence and breach of contract. In response to the news release, the plaintiff in the breach of contract action brought an additional action against the corporation for defamation.
The Court held that, just as a plaintiff’s pleadings are protected by privilege against defamation claims, a defendant’s behavior in response to those pleadings is similarly protected by privilege against defamation claims. However, the Court found it unnecessary to determine whether the applicable privilege was absolute or qualified. In reaching its decision, the court emphasized the corporation’s comments were not egregious and that the public has an interest in protecting the freedom of expression of participants in the judicial system.
This does not give a publicly traded corporation an absolute license to make defamatory comments in a news release, but does signal that corporations may more confidently comment on ongoing litigation without fear of provoking a defamation action.