On December 3, 2024, Justice Reed of the New York County Commercial Division issued a decision in Bryan v. Slothower, 2024 NY Slip Op. 51630(U), holding that the absolute litigation privilege extends to statements made in arbitral proceedings, explaining:
[T]he alleged statements that form the basis of defendant’s counterclaim were allegedly made in an arbitration proceeding, separate and apart from this action. Public policy mandates that certain communications, although defamatory, cannot serve as the basis for the imposition of liability in a defamation action. Communications made during participation in judicial or quasi-judicial proceedings are entitled to absolute privilege, which immunizes a communicant from liability in a defamation action. Such privilege can also extend to the preliminary or investigative stages of a judicial or quasi-judicial proceeding.
The record demonstrates that the statements complained of in defendant’s counterclaim were allegedly made during the course of an arbitration proceeding before FINRA. FINRA, the successor of the National Association of Securities Dealers, Inc. (NASD), is a self-regulatory organization that oversees member brokers, brokerage firms, and exchange markets for the purpose of safeguarding the investing public. FINRA has enforcement powers over its members and conducts its own investigations and administration of disciplinary proceedings. It is well-established that New York courts have extended absolute privilege to a wide array of hearings held by administrative agencies, finding such hearings to be in substance judicial. Thus, an arbitration and any preliminary process conducted by FINRA is considered quasi-judicial in nature. Accordingly, inasmuch as the statements at issue were made for the purpose or during the course of a quasi-judicial proceeding, they are protected by an absolute privilege.
(Internal quotations and citations omitted).