On March 28, 2023, the First Department issued a decision in TRB Acquisitions LLC v. Yedid, 2023 NY Slip Op. 01654, recognizing an exception to the absolute litigation privilege for threatening to give false testimony, explaining:
In the present appeal, plaintiffs do not dispute that the allegedly false information defendant provided to plaintiffs’ adversaries in the Reebok litigation was pertinent to those proceedings. Rather, plaintiffs argue that Supreme Court committed error in dismissing their complaint because defendant’s assertion of the litigation privilege constitutes abuse of the privilege, and the privilege’s protection should therefore be withdrawn.
In their briefs, plaintiffs refer to the sham-litigation exception in framing their argument in support of recognition of a further exception to the privilege, in this instance for well-pleaded allegations of extortion. Specifically, plaintiffs argue that where defendant affirmatively acts to carry out a threat made in connection with a rebuffed extortion threat, claims based on that course of conduct should be permitted, notwithstanding that the threat concerned testimony or intended testimony in a judicial proceeding.
In response, defendant’s essential contention is that, as a result of the absolute privilege, all pertinent statements made by anyone in the context of an ongoing litigation, including from nonparty or potential witnesses, cannot give rise to any civil claims. Defendant further argues that plaintiffs’ proposed exception is unsupported by relevant authority and would, moreover, improvidently weaken the privilege to the detriment of candor and the function of truth-finding in judicial proceedings.
Plaintiffs’ position, that an exception to the absolute litigation privilege may be recognized on the authority and general rationale of Posner, is persuasive, with one caveat. As noted, plaintiffs here allege that defendant, following a rebuffed extortion threat, affirmatively reached out to plaintiffs’ litigation adversary and indicated a willingness [*6]to provide false testimony. These allegations offer a distinction from those in Posner, however, as there was no apparent dispute that the reports to public authorities in Posner were truthful (see Posner, 18 NY3d at 568-569). Accordingly, the narrow exception recognized to decide the present appeal only concerns extortion based on threats of false testimony.
As observed by the Court of Appeals in Park Knoll, because the perceived social benefit in encouraging free speech or the discharge of governmental responsibility sometimes outweighs the individual’s underlying rights, the individual’s rights may have to yield to a privilege granted the speaker barring recovery of damages for the statements. Although the preceding quotation concerns the classification of privileges as either absolute or qualified, considerations of a privilege’s purpose are inherently relevant to examinations of whether the privilege has been abused.
Inasmuch as plaintiffs’ complaint does not allege that defendant’s attempted extortion was based on threats to testify truthfully, the parties’ briefs understandably do not thoroughly examine the relative benefits and detriments of an exception for extortion threats to provide truthful testimony in litigation. Consequently, because plaintiffs’ complaint only alleges threats to commit perjury—and considering (1) the risk, however small, of increasing the potential for harassment and fear of financial hazard for those discharging a public function and (2) the litigation privilege’s purpose to, among other things, promote the administration of justice—general principles of judicial restraint instruct that only a narrow exception be recognized here.
Under the circumstances, defendant’s invocation of the absolute privilege for statements made in and pertinent to a judicial proceeding to immunize the conduct alleged constitutes abuse of the privilege. Defendant’s arguments to the contrary are unavailing insofar as they would convert the privilege, under the right conditions, into an extortionist’s shield.
Accordingly, defendant’s alleged conduct—an extortion attempt by threatening to provide false testimony in a separate action if his demand in the arbitration were not accepted and, following rejection, affirmatively reaching out to plaintiffs’ adversaries in the separate Reebok litigation, indeed offering to provide false testimony in that action—is a course of conduct for which the protection afforded by an absolute privilege is appropriately withdrawn. Plaintiffs’ claim for breach of a confidentiality and nondisparagement agreement was thus improperly dismissed, and Supreme Court’s decision should be reversed and the complaint reinstated.
(Internal quotations and citations omitted).