On November 2, 2023, the First Department issued a decision in Small v. DMRJ Group LLC, 2023 NY Slip Op. 05551, holding that a complaint could be dismissed because of the plaintiff’s refusal to testify after invoking his Fifth Amendment rights, explaining:
Courts have the inherent authority to strike the complaint and dismiss the action where the plaintiff refuses to answer questions posed at an examination before trial on grounds of the privilege against self-incrimination. The only inquiry in reviewing a dismissal made pursuant to this inherent power is whether the questions that the plaintiff refused to answer were material and necessary to the defendant’s defense.
Defendant was entitled to argue that plaintiff’s fraudulent actions relating to Black Elk should deprive him of any compensation, including distributions from defendant, for his services as portfolio manager. In preparing that defense, defendant needed to discover information establishing whether plaintiff’s illegal conduct regarding Black Elk, one of Platinum’s largest investments, was central to or a dominant part of the services he rendered in his role as portfolio manager. Accordingly, plaintiff’s actions relating to Black Elk were material and necessary to defendant’s defense.
(Internal citations omitted).