Stega v New York Downtown Hosp. (
| Stega v New York Downtown Hosp. |
| June 27, 2018 |
| Fahey, J. |
| Court of Appeals |
| Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. |
| As corrected through Wednesday, October 3, 2018 |
[*1]
| Jeanetta Stega, M.D., Ph.D., M.S.N., Also Known as Jeanetta Malanowska-Stega, Appellant, et al., Plaintiff, v New York Downtown Hospital et al., Respondents, et al., Defendants. |
Argued June 6, 2018; decided June 27, 2018
Stega v New York Downtown Hosp.,
This Court's decision in Rosenberg v MetLife, Inc. (
Our summary of the facts is drawn from plaintiff's complaint, the allegations of which we must accept as true at this stage of the litigation on a motion to dismiss. Plaintiff, Dr. Jeanetta Stega, is a medical scientist who has specialized in gynecological and oncological research. An employee of defendant New York Downtown Hospital, plaintiff became Vice-President of Research and Chairperson of the hospital's Institutional Review Board (IRB) in 2009. The IRB oversaw clinical trials, involving human subjects, of products regulated by the Food and Drug Administration (FDA).[FN1]
In 2011, defendant Dr. Leonard A. Farber, an oncologist in private practice who had medical staff privileges at Downtown Hospital, entered into an agreement with Luminant Bio-Sciences, LLC to conduct a clinical trial of a compound that Luminant had developed to treat patients with metastatic cancer. Farber asked plaintiff to assist him in developing preparatory materials for the study, including a protocol and a patent application. Plaintiff advised defendant Jeffrey Menkes, Downtown Hospital's President and Chief Executive Officer,{**
Working after-hours, plaintiff drafted the preliminary documents for the Luminant study, for which Luminant paid her $50,000. Plaintiff opened a bank account in the name "Stega Research Group" and, as she phrases it in her complaint, she "deposited the $50,000 . . . in the Stega Research Group . . . account."
When Farber applied to Downtown Hospital's IRB for approval of the Luminant study, plaintiff recused herself from the board's deliberations and voting, but she answered other IRB members' questions about the study. The IRB approved the trial.
Conflicts arose between Farber and Luminant, and the clinical study soon went awry. In a telephone conversation with plaintiff, Farber allegedly threatened to destroy the trial and punish Luminant. Tensions between Farber and plaintiff intensified, and Farber threatened plaintiff with retribution too. It was at this point, according to plaintiff, that Farber told Menkes that plaintiff had stolen the Luminant study from him, that she had taken funds that did not belong to her, and that the drug compound was toxic and unsafe for patients.
Menkes and defendant Dr. Stephen G. Friedman, Downtown Hospital's Acting Chief Medical Officer, met with plaintiff and accused her of taking funds that belonged to the hospital. They also charged her with engaging in a conflict of interest by seeking approval from the IRB for the Luminant study despite being a member of that board. Plaintiff was placed on administrative leave. Following an investigation, Downtown Hospital officials concluded that plaintiff had violated the hospital's conflict of interest policy and had improperly taken money from Luminant "on the side." In February 2012, plaintiff's employment was terminated. Plaintiff and the IRB's Vice Chairperson were both removed from the board, which Downtown Hospital sought to disband.
In March 2012, plaintiff and the IRB's Vice Chairperson submitted a complaint to the FDA, which monitors the compliance of IRBs with its regulations. They expressed concerns{**
It was in this context that Friedman, during a May 22, 2012 meeting with an FDA inspector, stated that plaintiff had "channeled" Luminant's funds to a "Stega Research Group" at her home address. Friedman also told the inspector that plaintiff had requested that Farber add a patient with prostate cancer to the study, which otherwise had only lung cancer patients as subjects, and, when Farber refused, plaintiff had replied, "I am the IRB and I want the patient entered." Friedman informed the inspector that, in addition to terminating plaintiff, he had removed plaintiff and the Vice Chairperson from the IRB, and wished to disband the board, in part because it was "tainted" as a result of plaintiff's involvement.
The FDA subsequently released an establishment inspection report (EIR) to Downtown Hospital, outlining instances, unrelated to plaintiff's conduct, of procedural noncompliance by the IRB with FDA regulations. The EIR did not expressly discuss whether Downtown Hospital had properly terminated plaintiff's employment and removed [*2]her as IRB Chairperson, but noted that the "[i]nspection found certain improprieties documented by the hospital's management resulting in the removal of Dr. Stega."
Friedman's statements about plaintiff were published in the EIR, as follows:
"On May 22, 2012 a discussion with Dr. Steven Friedman was held at which time he discussed the reasons for the removal of Dr. J[e]anetta Stega from her positions at New York Downtown Hospital and the IRB. According to Dr. Friedman, Dr. Stega created the Stega Research Group using her home address. Funds for study LF 11-11 (Dr. Leonard Farber, [Principal Investigator]) from the sponsor [were] channeled to this group. Further Dr. Farber did not want to enter a prostate cancer patient onto{**31 NY3d at 667} this lung cancer protocol when Dr. Stega requested him to do so. Dr. Farber reportedly stated that the IRB would not approve this patient and Dr. Stega reportedly stated that she is the IRB and wanted the patient entered. . . .
"Dr. Stega was subsequently fired. Dr. Friedman felt that the IRB and their approvals were tainted and therefore the hospital removed Dr. Stega and . . . any members that had direct contact with Dr. Stega. This is one of the reasons Dr. Friedman wants to disband the IRB."
After the EIR came to her attention, plaintiff commenced this defamation action against Downtown Hospital, Friedman, Menkes, Farber, and others. Plaintiff asserts that her professional reputation has been significantly damaged by the publication of false, defamatory statements about her made by Friedman to the FDA inspectors, insofar as they undermine her standing with the FDA and her livelihood as a research scientist.
In lieu of an answer, the defendants moved to dismiss the complaint under CPLR 3211 (a) (7). As relevant here, defendants Downtown Hospital and Friedman contended that Friedman's statements are protected by an absolute privilege, and, in the alternative, that the complaint should be dismissed because the statements are either true on the face of the complaint or, in the instance of the remark that the IRB was "tainted," an expression of pure opinion.
Although Supreme Court granted the defendants' motion to dismiss in other respects, the court allowed plaintiff's defamation claim against Downtown Hospital and Friedman to survive, and severed the defamation claim against those defendants. Supreme Court reasoned that the statements at issue were not shielded by an absolute privilege, because the FDA's investigation had none of the indicia of a quasi-judicial proceeding, and in particular lacked safeguards such as an adversarial procedure or a determination subject to review. Plaintiff was not a "participant[ ] in the investigation, which was not an adversarial process; nor could [she] challenge the statements made about [her]. That it was an official governmental investigation conducted by a regulatory agency does not by itself make it a quasi-judicial function" (
Supreme Court further rejected the defendants' contentions about the content of Friedman's statements. The court ruled that Friedman's "statement that Stega 'channeled' money is not, at this stage, demonstrably true" (id. at *22). With respect to Friedman's remark that the IRB was tainted while plaintiff was its chair, Supreme Court concluded that the statement "would lead the average person to believe that the statement was proffered for its accuracy as a matter of fact, and had a readily understood meaning and can be shown to be true or false" (id. at *23-24 [internal quotation marks, citations, and square brackets omitted]).
Defendants Downtown Hospital and Friedman appealed from Supreme Court's order, insofar as it denied their motion to dismiss plaintiff's defamation cause of action against them. Plaintiff did not appeal.
The Appellate Division reversed Supreme Court's order, to the extent appealed from, granted defendants' motion, and directed the entry of judgment dismissing the complaint against them. The Appellate Division held that[*3]"the complained-of statements were made in a quasi-judicial context in which an absolute privilege protects them" (
A single Justice dissented, principally on the basis of this Court's decision in Toker v Pollak (
The Appellate Division granted plaintiff leave to appeal, certifying the question whether its order was properly made (
The first issue is whether Friedman's statements, as published in the EIR, are protected by absolute privilege. We hold that they are not.
The broad principles of immunity in defamation law are well established.[FN2] "Courts have long recognized that the public interest is served by shielding certain communications, though possibly defamatory, from litigation, rather than risk stifling them altogether" (Liberman v Gelstein,
Absolute privilege, which entirely immunizes an individual from liability in a defamation action, regardless of the declarant's motives, is generally reserved for communications made by "individuals participating in a public function, such as judicial, legislative, or executive proceedings. The absolute protection afforded such individuals is designed to ensure that their own personal interests—especially fear of a civil action, whether successful or otherwise—do not have an adverse impact upon the discharge of their public function" (Toker,
On the other hand, a statement is subject to a qualified privilege when it "is fairly made by a person in the discharge of{**
Whether allegedly defamatory statements are subject to an absolute or a qualified privilege "depend[s] on the occasion and the position or status of the speaker" (Park Knoll Assoc.,
In Toker (
Toker held that absolute privilege did not apply to statements made to the Department of Investigation of the City of New York, a law enforcement agency that investigated City employees, because "no quasi-judicial hearing at which plaintiff . . . was permitted to challenge defendant['s] . . . allegations was ever held," and the agency conducting the investigation was not "empowered . . . to grant any tangible form of relief reviewable on appeal in the courts. In sum, the proceeding . . . lacked all of the safeguards traditionally associated with a quasi-judicial proceeding" (Toker,
The significance of Toker is that, for absolute immunity to apply in a quasi-judicial context, the process must make available a mechanism for the party alleging defamation to challenge the allegedly false and defamatory statements. Of course, a judicial proceeding, in which absolute privilege applies, will not in itself give a defamed individual the opportunity to challenge sworn testimony if the individual is not a party to the proceeding. Yet any "character assassination" that occurs in a judicial proceeding is at least in principle subject to charges of perjury. Toker ensures that the expansion of the scope of absolute privilege, from testimony at judicial proceedings to the wide range of statements made to administrative agencies, is kept within narrow bounds: the privilege extends only if procedural safeguards enable the defamed party to contest what is said against her.
Our subsequent cases have not departed from these principles. Defendants rely primarily on Rosenberg (
Was plaintiff entitled to participate, by way of a hearing or otherwise, in the FDA's review of the IRB and thereby challenge the accusations against her made by Friedman? On this point, there is little disagreement. She was not. Plaintiff insists that she did not receive notice of any stage in the FDA's investigation of the IRB. Nothing in the FDA regulations gives{**
Defendants suggest that the FDA inspection process nevertheless qualifies as quasi-judicial simply because the IRB would have the right to appear at any hearing in which it contested the allegations against it. More specifically, defendants question whether Toker stands for the proposition that a name-clearing opportunity on the part of the party claiming defamation is a prerequisite for the absolute privilege to apply. They assert that the only proposition adhered to by this Court is that the proceeding must contain the possibility of an adversarial hearing, even if not necessarily a hearing at which the party alleging defamation could challenge the statements in question. This theory, however, flies in the face of the policy rationale for insisting on an adversarial procedure, namely to prevent the absolute privilege from shielding statements published in a setting in which the defamed party may never know of the statements and, even if he or she did, would have no way to rebut them (see Toker,
Defendants further insist that a qualified privilege would not be sufficient to foster the level of candor needed in the context in which the FDA is investigating IRBs, because of the fear of potential litigation, in which a speaker, as defendants see it, would be obliged to prove lack of malice. However, it is the defamation plaintiff who "would have the burden of showing that a statement is actionable because it was motivated by malice" (Rosenberg,
Naturally, a defamation defendant will be subject to discovery. Nevertheless, we do not believe that the imposition of{**
"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 . . . to the benefit of the public. Only those who act out of malice, rather than public interest, need hesitate before speaking" (Toker,44 NY2d at 221 ).
That protection is adequate to encourage candor in the context before us here. Additionally, while defendants are, of course, correct that the interest in protecting human subjects in clinical trials through FDA regulation is an especially compelling one, since human lives are at stake, we believe that ensuring that hospital employees are accurate and truthful about the character and professional standing of their colleagues is an important element in the protection of human subjects. There is, of course, no inherent conflict between being candid and being accurate.
[*6]In the alternative, defendants argue that Friedman's statement that plaintiff had "channeled" Luminant's funds to the "Stega Research Group" is not a false, defamatory statement because plaintiff's complaint reveals that it is true. Certainly, the falsity of an allegedly defamatory statement is an element of any defamation claim, but on a pre-answer motion to dismiss a defendant will prevail on this ground only if the statement's truth may be established from the complaint alone. While defendants point out that plaintiff's complaint states that she "deposited" the money in the Stega Research Group account, this does not have the same meaning as the communication that plaintiff "channeled" funds. This statement, in context, "connote[s] that Stega misappropriated funds" (
We also reject defendants' contention on this motion to dismiss that Friedman's statement that the IRB was "tainted" was a pure expression of opinion. Although "[a]n expression of pure opinion is not actionable," a "statement of opinion [that] implies that it is based upon facts which justify the opinion but are unknown to those reading or hearing it, . . . is a 'mixed opinion' and is actionable" (Steinhilber v Alphonse, 68 NY2d{**
Finally, we note that on appeal defendants do not contest the falsity or the defamatory nature of Friedman's statement that plaintiff requested the addition of a patient with prostate cancer to the Luminant study and then told Farber "I am the IRB and I want the patient entered."
Accordingly, the order of the Appellate Division should be reversed, with costs, the CPLR 3211 motion of defendants New York Downtown Hospital and Stephen G. Friedman, M.D., insofar as it sought to dismiss the defamation claim as against them, denied, and the certified question answered in the negative.
Rivera, J. (dissenting). The majority concludes that whether an absolute privilege applies to a communication made in the course of a quasi-judicial proceeding depends on the status of the subject of the communication, rather than the forum or circumstances in which the challenged communication is made. That rule has no support in this Court's prior decisions and undermines the public policy of encouraging greater openness in communications with government officials. Therefore, I dissent.
"Public policy mandates that certain communications, although defamatory, cannot serve as the basis for the imposition of liability in a defamation action" (Toker v Pollak,
The justification for an absolute privilege in these circumstances is well known. Cloaking these communications with absolute immunity furthers the public interest in effective government by encouraging individuals to properly discharge their public function and speak candidly about matters within their knowledge without fear of even an unsuccessful civil action{**
Consequently, and contrary to the majority's view, the absolute privilege applied to communications made in the course of the discharge of a public function does not depend on whether the subject of the communication, i.e. the party allegedly defamed, is also the subject of an administrative proceeding or investigation. The status of the person being discussed is irrelevant; "[a]bsolute privilege is based upon the personal position or status of the speaker" (id. [emphasis added]). What matters is not the target of the communication, but whether the communication was made during the course of the speaker's participation in a public function. Here, it is undisputed that the speaker was participating in a Food and Drug Administration investigation—the preliminary stage of a potential quasi-judicial proceeding.
We have never required that the subject of a communication be a participant in the proceeding, much less that the subject have an opportunity to challenge the alleged defamatory statement within the confines of that very proceeding. Such a rule would lead to uneven application—affording protection to some individuals but not others, and cloaking communications depending on the target of the speech and not its content—and inject uncertainty about the availability of absolute immunity for those participating in these types of proceedings. The majority's rule thus undermines what the Court has identified as the animating public policy for adopting an absolute privilege in quasi-judicial proceedings (see Rosenberg,
Neither Rosenberg nor Toker stand for the proposition adopted by the majority here (majority op at
664). The majority places unwarranted emphasis on dicta in Rosenberg that employees allegedly defamed by statements set forth in a Form U-5—an employee termination notice required by the National Association of Securities Dealers stating the reasons the employer terminated the employee—could commence an arbitration proceeding or a separate judicial action to expunge the alleged defamatory language (majority op at
672). Without any reference, or reliance on whether the employees had some{**
"[t]he Form U-5's compulsory nature and its role in the NASD's quasi-judicial process, together with the protection of public interests, lead us to conclude that statements made by an employer on the form should be subject to an absolute privilege. Analogously, close to 40 years ago in Wiener we determined that complaints involving attorneys should be accorded an absolute privilege because of 'the necessity of maintaining the high standards of our bar' (Wiener,22 NY2d at 332 ). The regulation of registered brokers in the securities industry is of no less importance" (8 NY3d at 368 ).
Having reached its conclusion that absolute immunity applies in the context of an employer's statement on a Form U-5, the Rosenberg majority then sought to correct the dissent, which asserted that a Form U-5 is not intended to be part of a court proceeding and does not usually result in regulatory action (see id. at 369 [Pigott, J., dissenting]). In doing so, the majority was not setting forth an element necessary to its determination that "the compulsory Form U-5 can be viewed as a preliminary or first step in the [National Association of Securities Dealers'] quasi-judicial process" (id. at 367). Instead, the majority's response was a factual aside and not an essential part of its holding.
The Court in Toker also focused on the scope of the proceeding, which it deemed "critical" to its absolute immunity determination, and not on the subject of the alleged defamatory statements (see Toker,
Even if I accepted the majority's gloss on these cases, I would not agree with its conclusion that the opportunity to challenge alleged defamatory statements must be afforded in an administrative hearing during which the statements are made or considered (majority op at
672). That rule contradicts language in Rosenberg that mentions remedies for defamed employees{**
Applying our precedent to the instant appeal, the communications made to the Institutional Review Board about plaintiff Stega are absolutely privileged. As the Appellate Division explained, "[i]t is not germane that it is Stega who is asserting the defamation claim; the statements given to the investigator are subject to an absolute privilege, period" (Stega v New York Downtown Hosp.,
Judges Stein, Wilson and Feinman concur; Judge Rivera dissents in an opinion in which Judge Garcia concurs; Chief Judge DiFiore taking no part.
Order reversed, with costs, the CPLR 3211 motion of defendants New York Downtown Hospital and Stephen G. Friedman, M.D., insofar as it sought to dismiss the defamation claim as against them, denied, and certified question answered in the negative.
Footnote 1:"Institutional Review Board (IRB) means any board, committee, or other group formally designated by an institution to review, to approve the initiation of, and to conduct periodic review of, biomedical research involving human subjects" (21 CFR 56.102 [g]).
Footnote 2:Although the allegedly defamatory statements were made to a federal investigator, the parties have assumed that New York, not federal, law governs the appropriate level of immunity to be afforded to Friedman. We accept, without deciding, the premise agreed to by the parties.
Footnote 3:In a grievance committee proceeding, the individual accused of wrongdoing has a right to request, and appear at, a hearing to contest the allegations (see Judiciary Law § 90 [4] [h]).
Footnote 4:"Upon termination of a registered representative, the NASD requires member firms to complete and file with the NASD a Uniform Termination Notice for Securities Industry Registration (Form U-5) within 30 days of dismissal and to provide a copy of the form to the employee" (Rosenberg,