On May 24, 2022, Justice Borrok of the New York County Commercial Division issued a decision in BDO USA, LLP v. Morris, 2022 NY Slip Op. 31682(U), holding that the absolute litigation privilege did not defeat a defamation claim when the litigation was a sham, explaining:
The defamation counterclaim is not properly dismissed at this stage. Statements made in the course of legal proceedings are privileged if they are at all pertinent to the litigation. This privilege, however, is not conferred where the underlying lawsuit is a sham action brought to defame the defendant. Mr. Stiles has alleged that the DC Action was brought to cause reputational harm to Mr. Jia-Sobota and anyone associated with him, including Mr. Stiles. He also has alleged that employees at BDO have referred to him as part of the evil empire and told him that they would make association with Mr. Jia-Sobota painful. At this stage, according Mr. Stiles every favorable inference as the Court must, he has sufficiently pled that statements made in connection with the DC Action are not subject to litigation privilege. It is also unclear at this stage whether the allegedly defamatory statements are protected by common interest privilege. The communications sent by BDO to inform clients and lawyers of the DC Action were quoted in the answer with counterclaims but have not been provided for the Court. Thus, BDO is not entitled to a factual finding that any such communications were privileged and therefore must be dismissed. Leave is granted to BDO to bring an OSC and to provide the court with the actual communications that form the basis for the claim of privilege or otherwise not defamatory and supporting its argument that dismissal is appropriate.
The allegedly defamatory statements are not subject to protection under New York’s anti-SLAPP statute because BDO has not demonstrated that they are a matter of public interest. Therefore, at this stage, the motion to dismiss the counterclaim for defamation per se must be denied.
(Internal citations omitted).