On June 26, 2025, the First Department issued a decision in TRB Acquisitions LLC v. Yedid, 2025 NY Slip Op. 03872, holding that the absolute litigation privilege does not bar a suit for breach of an NDA in connection with a litigation, explaining:
The court should not have granted defendant’s motion for summary judgment dismissing plaintiffs’ complaint. Plaintiffs allege that defendant breached the confidentiality and nondisparagement provisions of their agreement when he threatened to provide damaging testimony in a separate action between plaintiffs and Reebok (a litigation to which defendant was not a party) if his demands in an unrelated arbitration with plaintiffs were not accepted. Plaintiffs further allege that when his demands were rejected, defendant acted on his threats, contacted Reebok, and offered to provide damaging false testimony in that action.
Defendant now argues, in the third appeal in this case, that the Court of Appeals’ recent holding in Gottwald v Sebert (40 NY3d 240 [2023]) bars plaintiffs’ action. In Gottwald, the court held that there is no sham exception to the litigation privilege in a defamation action, thus conferring absolute litigation privilege no matter the motivation for the suit. The motion court agreed that Gottwald barred plaintiff’s action and granted defendant summary judgment on that basis.
Gottwald specifically holds that absolute immunity from liability for defamation exists for statements made in connection with a proceeding before a court when such words and writings are material and pertinent to the questions involved. However, here, plaintiffs’ sole cause of action is for breach of contract, not defamation, and thus, Gottwald is not applicable. Moreover, the absolute litigation privilege granted by the Gottwald court was conferred upon parties to the suit. Gottwald does not speak to whether that privilege extends to individuals ancillary or collateral to the litigation, such as a potential witness. Thus, even were we to find that Gottwald is controlling here, it would not dispositively establish that defendant, a nonparty to the action involving Reebok and plaintiffs, would enjoy the privilege. Accordingly, in reviewing defendant’s motion for summary judgment in which the facts alleged have been fully detailed, the litigation privilege does not apply because this action relates to claims of breach of contract, and defendant was not a party to the litigation wherein he threatened to provide confidential and disparaging information in violation of his contractual obligations.
(Internal quotations and citations omitted).