U.S. District Court for the Western Dist. of NY Case Summaries:

Daily Record (Rochester, NY), Aug 19, 2008

Job Discrimination

Retaliation

Collins v. Flynn

08-CV-59

Judge Skretny

Background: Are defamatory and "unprofessional" statements made in a memorandum of law protected by an absolute privilege against charges of libel under Massachusetts law?

Ruling: Ruling: Yes, where the statements, however hyperbolic, are relevant to the issues of the case.

Contentious litigation in Massachusetts ensnared the attorneys who now do battle amongst themselves in western New York. The plaintiffs, John Collins and Collins, Collins & Donoghue PC of Buffalo, assert libel, libel per se, and intentional infliction of emotional distress claims against defendant Flynn, counsel for CSX Transportation, Inc., arising out of litigation that is pending in the U.S. District Court for the District of Massachusetts.

Collins is the attorney for the plaintiffs in that case; Flynn represents CSX in that matter. Collins asserts that in September 2007, Flynn filed a memorandum of law in the District of Massachusetts which contained defamatory statements. Collins alleges that the defamatory statements were authorized by CSX and its agent. The defendants have filed a motion to dismiss and, alternatively, a motion to change venue.

Among the plaintiffs' allegations are that the defendant defamed attorney Collins by stating that Collins had "artificially created a factual premise for whole-body-vibration lawsuits," advanced fraudulent claims and lawsuits, allowed and encouraged railroad clients to commit larceny, created false 5001B work reports or encouraged CSX employees to complete false or fraudulent work reports, conducted improper ex-parte communications "in an attempt to gain further improper access to CSX documents and employees," and violated the Massachusetts Rules of Professional Conduct.

The plaintiff has moved to remand this action to the state court asserting a lack of complete diversity and that the amount in controversy does not meet the necessary statutory threshold. The defendants allege that defendant Hansen, a claims agent for CSX, was named in the suit solely to defeat diversity jurisdiction and that there is no basis for the claims against him. The defendants, in lieu of filing an answer to the complaint, moved to dismiss the plaintiffs' complaint based upon an alleged failure to state a claim upon which relief can be granted, a failure to make sufficient service upon Flynn and Flynn & Associates, PC and a lack of personal jurisdiction over the firm.

Defendants argued that the plaintiffs' settlement demand of $65,000, just short of the $75,000 necessary for federal jurisdiction, did not resolve the amount in controversy for purposes of determining the monetary threshold for diversity. Section 1332(a) requires complete diversity between all plaintiffs and all defendants. The defendants argued that the plaintiffs articulated no basis upon which Hansen can be found liable for the claims asserted in complaint and that he was simply added to frustrate diversity.

Magistrate Judge Hugh B. Scott noted in his report and recommendation to Judge Skretny on July 21 that "[u]nder the doctrine of fraudulent joinder, courts overlook the presence of a non-diverse defendant if from the pleadings there is no possibility that the claims against that defendant could be asserted in state court."

A preliminary issue in this dispute is the determination of the controlling substantive law. The court noted that the limited publication of the allegedly libelous statements in a court filing in the Massachusetts District Court significantly reduces the exposure of the published statements in New York. This reduced the likelihood that Collins' reputation would be harmed in his home state and thus it limited the State of New York's interest in the litigation. Judge Scott reasoned that the substantive law of Massachusetts is controlling under these circumstances.

The defendants had argued that Hansen could not possibly have been liable for statements made by CSX's attorney. Further, under the Massachusetts law that was found to be controlling, the defendants argued that the memorandum of law filed in the Massachusetts court was subject to an absolute privilege that attaches to statements made in the context of litigation under Massachusetts law. This absolute privilege provides a complete defense "even if the offensive statements are uttered maliciously or in bad faith," Doe v. Nutter, McClennan & Fish, 41 Mass. App. Ct. 137, 140 (1996), so long as the challenged remarks are relevant or pertinent to the judicial proceedings.

Magistrate Judge Scott would find in his report that Hansen had been fraudulently joined in this litigation and that complete diversity exists between the plaintiffs and defendants.

On the issue of the purported amount in controversy, the defendants point out the plaintiffs' business success by asserting that Collins' FELA practice is lucrative. They cite to numerous cases in which Collins obtained damages for clients in amounts ranging between $500,000 to $4.7 million. The defendants argue that if the plaintiffs were deprived of even a single Federal Employer's Liability Act case as a result of the allegedly defamatory statements, there is a reasonable probability that the injury suffered by the plaintiffs would exceed $75,000.