DEFENDANTS’ MOTION TO AMEND THEIR COUNTERCLAIM FOR DEFAMATION, DEFAMATION PER SE AND DEFAMATION BY IMPLICATION SHOULD HAVE BEEN GRANTED; CRITERIA EXPLAINED (FOURTH DEPT).

The Fourth Department, reversing Supreme Court, determined defendants’ cross-motion to amend the counterclaim for defamation should been granted. The allegations of defamation, defamation per se and defamation by implication were deemed sufficient. The decision is fact specific and cannot be fairly summarized here. The plaintiff and defendants, licensed investment advisors, entered an employment arrangement which broke down. Plaintiff sued for breach of a restrictive covenant. Defendants asserted a counterclaim for defamation based upon emails sent by plaintiff to their business clients:

Defendants sufficiently alleged that the statements made by the individual parties were false and that they were reasonably susceptible of a defamatory connotation. In determining the sufficiency of a defamation pleading, we must “consider ‘whether the contested statements are reasonably susceptible of a defamatory connotation’ ” … , and, in doing so, we must “give the disputed language a fair reading in the context of the publication as a whole” … . Here, the emails were sent to clients of plaintiff who had previously been clients of defendants and advised them that defendant was no longer employed by plaintiff. The emails stated that the investment trading industry was “highly regulated,” that plaintiff had “compliance policies” to protect its clients against “conflicts of interest,” and that defendant found those policies “overly burdensome.” We conclude that the disputed language provides a basis “from which the ordinary reader could draw an inference” … that plaintiff was accusing defendant of failing to adhere to ethical standards in the investment trading industry. …

” ‘A statement imputing incompetence or dishonesty to the [party] is defamatory per se if there is some reference, direct or indirect, in the words or in the circumstances attending to their utterance, which connects the charge of incompetence or dishonesty to the particular profession or trade engaged in by [the party]’ ” … . The statement “must be more than a general reflection upon [the party’s] character or qualities[;] . . . [it] must reflect on [the party’s] performance or be incompatible with the proper conduct of [their] business” …. Here, as alleged in the proposed amended counterclaim, the statements conveyed that defendant was unable to conduct her work in a legally compliant and ethical manner and that she lacked professional competence or integrity. …

” ‘Defamation by implication’ is premised not on direct statements but on false suggestions, impressions and implications arising from otherwise truthful statements” … . There is a heightened legal standard for a claim of defamation by implication … . “Under that standard, ‘[t]o survive a motion to dismiss a claim for defamation by implication where the factual statements at issue are substantially true, the [party asserting the defamation claim] must make a rigorous showing that the language of the communication as a whole can be reasonably read both to impart a defamatory inference and to affirmatively suggest that the author intended or endorsed that inference’ ” … . The second part of the test is an objective inquiry and ” ‘asks whether the plain language of the communication itself suggests that an inference was intended or endorsed’ ” … . Armbruster Capital Mgt., Inc. v Barrett, 2025 NY Slip Op 06493, Fourth Dept 11-21-25

Practice Point: Consult this decision for a detailed discussion of the elements of defamation, defamation per se, and defamation by implication.