RCI HOSPITALITY HOLDINGS INC v. WHITE (2023)

Order, Supreme Court, New York County (Sabrina Kraus, J.), entered February 9, 2022, which, to the extent appealed from as limited by the briefs, denied defendant's motion to dismiss the cause of action for defamation pursuant to Civil Rights Law § 74, unanimously affirmed, with costs.

The court correctly declined to dismiss plaintiffs’ defamation claim under the “fair report privilege” (Civil Rights Law § 74) on the ground that plaintiffs adequately asserted the exception to that privilege set forth in Williams v. Williams (23 N.Y.2d 592 [1969]).  Civil Rights Law § 74 provides, in relevant part, that a “civil action cannot be maintained against any person ․ for the publication of a fair and true report of any judicial proceeding.”  Williams held that the protection of the statute may not be invoked where a party maliciously institutes a judicial proceeding alleging false and defamatory charges as a vehicle to publish and disseminate those charges (see Williams, 23 NY3d at 599).  As is clear from the Court of Appeals’ most recent discussion of it, the Williams exception applies and prevents early dismissal of a defamation claim where there are nonconclusory allegations that raise a question of fact as to whether the underlying litigation was maliciously instituted for the purpose of defaming or pressuring a party into taking certain action, such as renegotiation of a contract (see Gottwald v. Sebert, ––– NY3d ––––, ––––, 2023 N.Y. Slip Op 03183, *3 [2023]).

Here, the complaint adequately asserts the exception based on the allegations that defendant employed a strategy to avoid paying monies that he owed to plaintiffs’ clubs by falsely accusing plaintiffs of drugging and robbing him in the press, in the hope that plaintiffs’ “fear of unwanted negative press would result in them rushing to quiet his false claims” by reversing the charges that he had paid and offering additional “hush money.”  The complaint further alleges that defendant previously filed the summons with notice containing the false and defamatory allegations in order to “bolster the narrative [he] gave to the press, and to paint himself as a bona fide claimant.”

Because plaintiffs’ defamation claim was not frivolous, defendant's request for sanctions under CPLR 8303–a and 22 NYCRR 130–1.1 was properly denied.