The First Department, reversing Supreme Court, in a full-fledged opinion by Justice Rodriguez, determined defendant’s motion to dismiss the complaint for failure to state a cause of action should not have been granted. The complaint alleged breach of a confidentiality and nondisparagement agreement (TRB Agreement) which stemmed from a trademark infringement and unfair competition action brought by nonparty Reebok. “… [D]efendant and his attorneys allegedly caused anonymous phone calls to be made to Reebok’s counsel stating that defendant possessed information that TRB [plaintiff] ‘intended to copy Reebok from the get-go.’ Defendant’s attorneys also notified Reebok’s counsel that defendant would comply with a subpoena issued to him. Reebok listed defendant as a witness before trial and detailed defendant’s expected testimony, including allegedly false testimony that TRB intended to create a ‘knockoff’ brand infringing on Reebok’s marks. The description of expected testimony also made clear that defendant had breached the TRB Agreement by disclosing information concerning TRB’s operations and information concerning the Reebok litigation:”
The main issue presented on this appeal is whether plaintiffs’ complaint alleges conduct upon which invocation of the absolute litigation privilege would constitute abuse of the privilege such that its protections should not apply or be withdrawn.
Examination of the applicable law, particularly with respect to plaintiffs’ proposed exception to the privilege, demonstrates that the course of conduct alleged implicates a limited exception analogous to that applied in Posner v Lewis (18 NY3d 566 ) to another absolute privilege. Accordingly, where a party engages in an extortion attempt by threatening to provide false testimony in a separate action if their demands are not accepted, and, following rejection, affirmatively reaches out to the extortion target’s adversaries in the separate litigation, indeed offering to provide false testimony in that action, the absolute litigation privilege will not bar the action. TRB Acquisitions LLC v Yedid, 2023 NY Slip Op 01654, First Dept 3-28-23
Practice Point: Here defendant’s offer to provide false testimony in a separate proceeding was not protected by the litigation privilege in this action alleging defendant’s breach of a confidentiality and nondisparagement agreement.