The Virginia Defamation Law Blog
A defamation plaintiff confronted with a qualified privilege can defeat it by proving common-law malice, and one recognized way of doing so is to show that the defendant acted out of personal spite or ill will. What, then, of a defendant who, in the same text exchange in which he transmitted the allegedly defamatory document, called the plaintiff a “shitty human” who “deserves all of it”? In yesterday’s opinion in Kakar v. Sanghani, the Court of Appeals of Virginia held that such evidence did not compel a finding of malice and affirmed a judgment for the defendant after a bench trial. The court held that qualified privilege attached to a chief executive’s communication to a major shareholder (a question on which Virginia case law had been silent) and that the circuit court was not plainly wrong in finding that the plaintiff failed to prove malice by clear and convincing evidence. The opinion clarifies that to overcome qualified privilege based on spite or ill will, spite must be the motive for the communication, not merely present. The statement must be “actuated by” spite or ill will “independent of the occasion.” Hostility that coexists with a legitimate purpose is not enough.
The dispute grew out of a corporate acquisition. In November 2020, Octo Consulting Group, LLC acquired Sevatec, Inc., a company founded and run by Arvinder “Sonny” Kakar, who joined Octo as Head of Strategy and Vice Chair of the Board. Mehul Sanghani was Octo’s CEO. The relationship soured over the name of the combined company: Kakar insisted that the two names be merged, and the board decided the name would remain “Octo.” According to Sanghani, Kakar began to disengage from his responsibilities, canceling meetings, failing to participate in board meetings, and mismanaging projects to which he was assigned. On one occasion, Kakar allegedly cursed and made obscene gestures at Sanghani and another company representative. On another, Kakar allegedly threatened to punch the chairman of Octo’s parent company in the face.
Throughout this period, Sanghani was in continual contact about Kakar with Robert McCord, Octo’s third-largest shareholder, its former president and chief operating officer, and a friend and advisor to Sanghani. Several of those conversations were laced with expletives aimed at Kakar. After the alleged threat, the board formed a Special Committee, which excluded Sanghani and McCord, although Sanghani attended its meetings to provide firsthand accounts. The committee’s outside counsel investigated and delivered to Kakar a Notice of Material Breaches and Willful Misconduct which, according to Kakar, falsely asserted that he had abdicated his duties, breached his fiduciary duties, harassed employees, and materially breached his duty to manage certain contracts. When McCord texted Sanghani to ask, “How did Sonny react?”, Sanghani sent him the Notice, adding that Kakar “sure must have lost his shit” and that “[h]e is a shitty human and deserves all of it.” McCord 
replied that Kakar was “an arrogant, narcissistic greedy entitled asshole,” and Sanghani agreed.
Kakar sued Sanghani for defamation based on the publication of the Notice to McCord. The circuit court ruled for Sanghani at the conclusion of the bench trial. Assuming without deciding that one or more statements in the Notice were false, the court held that the communication was qualifiedly privileged as a matter of law and that Kakar had not produced clear and convincing evidence of malice sufficient to overcome the privilege. The Court of Appeals affirmed.
The Court of Appeals first addressed the privilege itself. A qualified privilege attaches to communications between persons on a subject in which they have an interest or duty. (See Cashion v. Smith, 286 Va. 327 (2013)). Finding no Virginia authority on shareholders, the court looked to decisions from Delaware, Utah, Nebraska, and Hawaii and concluded that the privilege can apply to a communication with a shareholder, provided that both the shareholder and the speaker have an interest or duty in the subject matter. The court limited the holding: not every shareholder shares an interest in every corporate matter. McCord qualified because he was a major investor substantially involved both in the company and in the specific matter of Kakar’s integration and alleged misconduct.
Once a communication is deemed privileged, the question becomes whether the privilege was abused or the statement was published with malice. Malice, the court held, can be established in a variety of ways:
Any one of the following, if shown by clear and convincing evidence, is enough to be a showing of malice: (1) “strong or violent language disproportionate to the occasion is used,”…; (2) a showing “that the communication was actuated by some sinister or corrupt motive such as hatred, revenge, personal spite, ill will, or a desire to injure the plaintiff,”…; (3) the “equivalent to malice, that the communication was made with such gross indifference and recklessness as to amount to a wanton or wil[l]ful disregard of the rights of the plaintiff,”…; (4) “the statements were made with knowledge that they were false or with reckless disregard for their truth,”…; (5) “the statements were not made in good faith,”…; or (6) the “statements [we]re communicated to third parties who have no duty or interest in the subject matter,”…. This list is non-exhaustive.
Kakar relied on spite. Beyond the texts that accompanied the Notice, he pointed to messages sent months earlier in which Sanghani told McCord that the goal was to buy Kakar out by offering him something to make him “go the fuck away and then sweep up his equity.”
The court held that this evidence did not require reversal. Viewing the record in the light most favorable to Sanghani, it concluded that his language was proportionate to the occasion given Kakar’s alleged misconduct and threats; that his repeated efforts to reconcile with Kakar suggested the publication was not motivated by ill will; that he testified he believed the contents of the Notice to be true; and that his practice of keeping McCord informed and seeking his advice undercut any inference of bad faith. “Kakar failed to show with clear and convincing evidence that the dissemination was motivated by spite, ill-will, a desire to injure Kakar independent of the occasion, or any other element required, and thus the circuit court was not plainly wrong,” the court held.