A lawyer representing an eBay seller in a dispute with the seller’s trading agents drew a defamation claim from the agents. But the case had a happy ending for the lawyer, as the New Jersey court of appeals held last month that two letters the lawyer wrote to eBay were protected by the Garden State’s broad litigation privilege. (H/t to Pete Gallagher, blogging over at Pete’s Take.)

The case spotlights the scope of the privilege, a “backbone” of the American judicial system, widely adopted in some form throughout the U.S., and enshrined in § 588 of the Restatement of Torts (Second).

“Dear eBay personnel…”

The underlying case started out in small claims court, where the two trading agents sued the seller. The seller, represented by Lawyer, roared back with a multi-prong counterclaim that sought treble damages under the state consumer fraud act, plus punitive and other damages. The counterclaim, which took the case out of small claims court, was based on an agreement for the trading agents to help seller sell goods on eBay. The underlying case later settled.

But during the course of the underlying case, Lawyer wrote two identical letters to eBay, which was not involved as a party. The letters were not addressed to anyone in particular at eBay. They said that: seller had hired the trading agents based on eBay’s representations regarding its trading assistant program; the trading agents had refused to pay money due to the seller; the trading agents “likely” never had a fidelity bond with eBay; and that eBay should suspend them from its program. Lawyer also asked how eBay intended to “handle this matter.”

In their later complaint against Lawyer, the trading agents alleged claims including defamation and interference with contract, based on the letters. The trial court dismissed the case, and the appellate division, in its unpublished opinion, affirmed.

Explore the truth — no recrimination

The privilege “provides immunity from suit to permit unfettered expression” in connection with litigation, noted the court of appeals. Its contours under New Jersey law apply broadly to give absolute protection to:

  • any communication;
  • made in judicial or quasi-judicial proceedings;
  • by litigants or other participants;
  • to achieve the objects of the litigation;
  • where the communication has some connection or logical relation to the action.

Citing long-standing precedent, the privilege applies, said the court, even to statements spoken maliciously; even if connected to a not-yet-pending action; and even if addressed to a non-party to the litigation.

Here, the court said, Lawyer’s detailed letters were related to and relevant to the underlying case between Lawyer’s client and the trading agents. They were in line “with the type of inquiry deemed … to be necessary to a thorough and searching investigation of the truth, and therefore, essential to the achievement of the objects of litigation.” EBay’s response could have led to a claim against eBay; or could have prompted eBay to investigate the trading agents’ practices, possibly leading to additional support for seller’s claims against them.

The Lawyer’s statements, held the court, were well within the scope of the absolute privilege and its policy to “explore the truth of a matter without fear of recrimination.”

But don’t go wild

The litigation privilege is obviously good for lawyers and allows us broad scope to make statements relevant to litigation. But a caveat: as always, state wrinkles may apply. (See this 2015 law review article, at n. 14, commenting about Georgia and Louisiana, for instance.) And you should be aware that for disciplinary purposes, your motivation counts. In representing a client, Model Rule 4.4 bars using means that have no substantial purpose other than to embarrass, delay or burden a third person.