Virginia courts have long held that statements made in connection with judicial proceedings are entitled to absolute protection from defamation liability. To encourage truthfulness in litigation, Virginia public policy has extended an absolute privilege to statements made in a party’s pleadings, statements made during depositions, and to the testimony of witnesses at trial, provided the statements are generally relevant to the proceeding. But what protection, if any, should be afforded to pre-litigation statements, such as those contained in a demand letter to a prospective defendant?
Fairfax Circuit Court Judge R. Terrence Ney recently had the opportunity to consider whether a defamation claim could be based on allegedly defamatory statements made in a draft complaint forwarded to a small group of prospective defendants for purposes of exploring settlement opportunities prior to filing suit. The issue has not yet been decided by the Virginia Supreme Court, and is particularly interesting because the ethical rules that prohibit lawyers from making frivolous claims arguably do not apply to statements made outside a judicial proceeding. As a result, when drafting pre-litigation demand letters, many lawyers are far less assiduous in their fact-checking than they would be when filing an actual pleading with the court.
In a sense, the situation is similar to the question of whether to grant a privilege to a law firm’s statements in a press release announcing a lawsuit. If a complaint contains defamatory statements, they would not be actionable, even if made with knowledge of their falsity, due to the absolute privilege for statements made in judicial proceedings. A press release discussing the lawsuit, however, is made outside the judicial proceeding, so it does not enjoy the same level of protection. Like a press release, a demand letter containing a draft complaint is very closely related to a judicial proceeding, or at least a contemplated one, but is not part of the proceeding itself.
Judge Ney found that the threatened complaint was substantially similar to the actual complaint filed eight days later and that it was published only to the prospective defendants having a legitimate interest in the matter. Consequently, he held that the content of the draft complaint was entitled to absolute protection and he sustained the defendants’ demurrer.
Judge Ney ultimately adopted the approach of the Restatement (Second) of Torts Section 586, which states that “An attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding…if he [sic] has some relation to the proceeding.” Building on that foundation, the court followed the two-part test established by an earlier circuit court case from Norfolk, which provided a two-step process to determine whether pre-litigation statements should be afforded an absolute privilege: (1) the court should determine whether the statement was made “preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as a part of a judicial proceeding”; and (2) if so, it should then determine whether the statement “has some relation to a proceeding that is contemplated in good faith and under serious consideration.”
This is a good rule, as it not only provides protection for statements made in connection with contemplated litigation, but also because it will discourage the practice of sending frivolous demand letters threatening litigation the sender has no intention of ever bringing before a court.