Eugene Boice, John Di Palermo, and Robert Wahrman v. Unisys CorporationEugene Boice, John Di Palermo, and Robert Wahrman v. Unisys Corporation
Lead Opinion
On this appeal, we must decide whether a person, who in response to a subpoena turns over documents to a government official, knowing that the documents contain libelous statements, enjoys an immunity from a suit for defamation. If so, is the immunity absolute or qualified?
The district court (Con. G. CholaMs, Judge) held that such a person was not absolutely immune from defamation suits arising out of the surrender of documents under a subpoena from the New York State Inspector General. The court concluded that Unisys enjoyed only a qualified privilege and could not avail itself of the absolute privilege because the Inspector General did not act in a judicial or quasi-judicial capacity.
We find that New York has long accorded an absolute privilege from defamation suits to those who produce evidence under compulsion of a governmental subpoena. Thus, we reverse.
BACKGROUND
On review of this denial of a motion to dismiss, we accept as true all the facts pled in the plaintiffs’ complaint.
The plaintiffs, Eugene Boiee, John DiPal-ermo, and Robert Wahrman, were employed by the New York State Department of Social Services. The defendant, Unisys Corporation, is a vendor of computer equipment and it does business with the Department of Social Services.
Between 1988 and 1991, several Unisys employees submitted hundreds of phony expense vouchers to Unisys’s accounting department, seeking “reimbursement” for expenses that were never incurred. These unscrupulous employees falsely claimed in the vouchers that they had entertained the plaintiffs on a near daily basis, ostensibly to drum up business.
In September 1992, the New York State Inspector General began an inquiry into the entertainment of state employees. See N.Y. State E.O. No. 103 (Oct. 4, 1987) (granting the Inspector General power to investigate fraud, abuse and corruption in state agencies). During the investigation, the Inspector General served a subpoena upon Unisys, requiring that a Unisys official personally appear at a private hearing, and bring with him copies of “all expense reports ... relating to ... entertainment expenses provided to New York State employees from January 1, 1988 to the present.” The subpoena contained the usual language that a personal appearance was not necessary if Unisys sent the documents by mail. It warned, however, that failure to comply would make Unisys “liable to the penalties prescribed by law.”
Before Unisys produced the documents, a Unisys employee tipped off plaintiff DiPaler-mo about the subpoena and the falsified vouchers. DiPalermo promptly called Uni-sys and demanded that it tell the Inspector General that the plaintiffs’ names had been falsely placed on the vouchers. Unisys assured DiPalermo that it would send the Inspector General a letter explaining that the vouchers were phony. Despite its promise, Unisys turned the documents over to the Inspector General (in lieu of giving testimo
The plaintiffs sued Unisys in New York Supreme Court claiming civil rights infringement, intentional infliction of emotional distress, and defamation. On this last claim, the plaintiffs alleged that Unisys libeled them by producing the vouchers knowing that they falsely named plaintiffs. The complaint further alleged that Unisys refused to explain that the vouchers were falsified because it was trying to cover up infractions that Unisys itself had committed.
Unisys removed the action to the United States District Court for the Northern District of New York based on diversity jurisdiction. Unisys then moved to dismiss the entire complaint. Regarding the defamation claim, Unisys asserted that it enjoyed an absolute privilege from suit for defamation arising out of the documents produced to the Inspector General because: (1) the Inspector General’s proceeding was quasi-judicial; and (2) the document production was compelled by subpoena.
The district judge granted Unisys’s motion in part, and dismissed the civil rights and emotional distress claims. It refused to dismiss the defamation claim, however, ruling that Unisys’s privilege not to be sued for defamation was qualified only, and not absolute. The judge found that the absolute privilege was not available because the Inspector General’s investigation did not have enough quasi-judicial attributes to prevent abuse of the privilege. In reaching this conclusion, the district judge noted that: (1) the Inspector General has no remedial enforcement powers of his own; and (2) the investigation lacked procedural safeguards such as the right to cross-examine and the ability to appeal determinations of fact. The court did not address Unisys’s compelled evidence argument.
DISCUSSION'
I. Appellate Jurisdiction
There is a question whether we have jurisdiction to review the district court’s interlocutory order. Federal appellate jurisdiction exists over certain important interlocutory orders that regard matters collateral to the claims asserted at trial. See Cohen v. Beneficial Indus. Loan Corp.,
We find that the denial of a motion to dismiss for absolute privilege is immediately appealable. The absolute privilege assures a citizen that he cannot be sued for defamation on the basis of his response to the subpoena. Indeed, immunity and privilege serve the same purpose: to encourage the possessor to execute his responsibilities fully, without fear of being sued later for civil damages. Compare Mitchell v. Forsyth,
Because the immunity is designed to insulate an individual from litigation, an order denying total immunity is conclusive, and meets the first Gulfstream prong. The second prong is met because the existence of absolute immunity, a privilege against suit, is entirely separate from the merits of the claim. See Mitchell,
II. Absolute Versus Qualified Privilege
Public policy requires that certain communications, though defamatory, are privileged, and may not serve as the basis for a defamation action. See Park Knoll Assocs. v. Schmidt,
Vintage ease law demonstrates that New York bestows an absolute privilege upon those whom the government compels to give evidence. See, e.g., Hirshfield v. Henley,
In Hirshfield, for example, the New York Court of Appeals held that a witness subpoenaed by the New York City Commissioner of Accounts must testify, and that he would receive the same privileges accorded to a witness in a judicial proceeding, i.e., absolute immunity. See
In holding that witnesses before the Commissioner enjoy the same protection as those who testify in court, Hirshfield relied exclusively on the fact that the Commissioner had the power to compel witnesses to testify and examine them under oath: “Those who are made witnesses in virtue of those powers are entitled to all the privileges and protection extended by the law to witnesses in judicial proceedings.” Id. (emphasis added).
Similarly, in Newfield v. Copperman,
We read these cases to establish that, under New York law, a person who discloses information to a government officer or agency enjoys an absolute immunity from a defamation suit based on that disclosure so long as: (1) the disclosure was compelled by subpoena; (2) the disclosure materially responded to the subpoena; and (3) the person did not set the investigation in motion, or otherwise manipulate the investigative process to promote the libel. Such an absolute immunity is conferred regardless of whether the proceeding may be described as quasi-judicial.
Here, the Inspector General ordered Unisys, under penalty of law, to produce documents reflecting the entertainment of
The plaintiffs argue that these cases do not bestow absolute immunity upon those who are compelled to publish defamatory material. Citing Toker v. Pollak,
We reject this narrow reading of Toker. In Toker, a defendant called a District Attorney’s office to criticize the qualifications of a potential judicial appointee. The appointee sued the defendant for defamation. Noting that a person who volunteers statements to a state official, without a hearing, compulsion of subpoena, or any procedural safeguards, cannot avail himself of the “quasi-judicial proceeding” basis for absolute immunity, Toker held that the defendant was not absolutely immune. See id. at 220-21,
Toker explained that absolute immunity would be inappropriate for “communications which because of the absence of a hearing may often go unheard of, let alone challenged, by their subject.” Id. at 222,
A third course, proposed by plaintiffs, would require a person responding to a subpoena to disavow, disclaim, or correct libelous statements contained in the documents. Such a rule would entail review by counsel (perhaps by a libel lawyer), investigation of events reflected in (possibly voluminous) documents, and fencing with people (such as plaintiffs) who have advance notice that potentially damaging or libelous documents may be produced. The increased costs, obligations and risks associated with such a rule would impede the swift and voluntary compliance that the immunity rule is intended to induce.
We further note that Hirshfield bestowed absolute immunity even though the proceeding was far from judicial. The Commissioner in Hirshfield was conducting a fact-finding investigation to prepare a report for the Mayor. While he had the power to subpoena witnesses and examine them, the Commissioner had no authority to take remedial action, and he did not examine witnesses at a hearing. See id.,
Absolute immunity from defamation suits rests on policy reasons that are still sound. If a person gives the government defamatory material under threat of contempt, and has not manipulated the proceedings in any way, he should not be subject to a
CONCLUSION
“[T]he claims of the individual must yield to the dictates of public policy, which requires that the paths which lead to the ascertainment of truth should be left as free and unobstructed as possible.” Calkins v. Sumner,
REVERSED and REMANDED with instructions to dismiss.
Dissenting Opinion
dissenting:
I do not agree that “[v]intage ease law demonstrates that New York bestows an absolute privilege upon those whom the government compels to give evidence.” Maj. op. at section II. Accordingly, I respectfully dissent.
It is axiomatic that this Court, sitting in diversity, is bound to follow the law of New York. New York courts consistently have held that the dispositive question for absolute immunity purposes is the nature of the proceeding in which the allegedly defamatory statement was made and, contrary to the majority’s conclusion, not whether publication of the statement was compelled by subpoena. As the New York Court of Appeals explained in the controlling case, Toker v. Pollak,
New York controlling authority does not confer absolute immunity on a party merely because the production of documents is compelled by a subpoena. See, e.g., Mancini v. Marine Midland Bank,
Finally, Unisys was not presented with as intractable a dilemma as the majority suggests. A qualified privilege will provide the necessary protection to those in Unisys’ predicament, as New York law fully recognizes. See Toker,
The protection afforded by a qualified privilege should not be cavalierly dismissed as inadequate. On the contrary, while not providing an absolute cloak of protection, a qualified privilege does provide an atmosphere in which a civic-minded citizen may, without fear, convey information which he believes the disclosure of which will redound to the benefit of the public. Only those who act out of malice, rather than public interest, need hesitate before speaking. It is in these latter instances that [pjroof of such indirect motive will defeat the privilege which would otherwise have attached, for it is not to the convenience and welfare of society that false and injurious communications as to the reputation of others should be made.
Accordingly, I would affirm.