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Court refuses to apply 'self-interest' privilege in libel case

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  1. Libel and Privacy

    NMU         SECOND CIRCUIT         Libel         Dec 12, 2000    

Court refuses to apply ‘self-interest’ privilege in libel case

  • A real estate appraiser fails to make a defamation claim even under established state law, the Second Circuit ruled in dismissing the case.

The U.S. Court of Appeals in New York City (2nd Cir.) upheld the dismissal of a libel claim against Prudential Insurance, but it declined to apply the “common-interest” privilege, a legal theory which allows for a qualified protection of defamatory communications made by one person to another on a subject in which both share an interest.

The court curtailed what it saw as an increasingly expansive view of the “common interest” privilege in its decision on Dec. 7. The appeals court noted previous applications of the privilege have been “tightly confined to cases in which the alleged defamatory statements were published to an extremely limited, clearly defined group of private persons with an immediate relationship to the speaker, such as a family member or an employer’s own employees.”

Paula Konikoff, a real estate appraiser, sued Prudential for defamation alleging the insurance company publicly demeaned her objectivity in appraising. Several Prudential-managed properties had been investigated for value inflation, which led to investor unrest. Prudential published a report claiming all of its properties were properly valued “possibly excepting the disputed 130 John Street incident.” Konikoff appraised that property.

Konikoff also claimed a statement during an investor session improperly suggested she was fired because of the allegations of property overvaluing.

The district court held that the company’s statements were entitled to protection under the qualified common law privileges of “common-interest” and “self -interest,” which protects statements made in the speaker’s own legitimate interests.

The appeals court refused to apply the privileges to the company’s statements, stating that applying the privileges here “could have significant ramifications.” The court was concerned that the privilege might be extended to “all defensive statements to and through the media made by people and entities that deal with the general public.” The court also said under an expansive view media defendants might be able to use the privilege as a defense “since members of the media share with their audience a common interest in the events of the day.”

The appeals court nonetheless dismissed the case under established New York law. The principle, known as the Chapadeau test, requires a private plaintiff to prove that statements made about her were made “in a grossly irresponsible manner without due consideration for the standards of information gathering and dissemination ordinarily followed by responsible parties.”

The appeals court determined Prudential acted responsibly in investigating the appraisal incident, publishing the report and dealing with investor concerns.

The court also distinguished the Chapadeau test from the test for actual malice; that is, a statement made with knowledge of its falsity or in reckless disregard for the truth. In certain cases, the court suggested, the Chapadeau test for private persons may actually be a higher standard to meet than the actual malice requirement for public figures.

(Konikoff v. Prudential Insurance Co. of America) DB

© 2000 The Reporters Committee for Freedom of the Press

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