Sahara Gaming Corp. v. Culinary Workers Union Local 226

984 P.2d 164, 115 Nev. 212, 1999 Nev. LEXIS 50

• Court: Nevada Supreme Court
• Decided: August 27, 1999
• Docket: 28555
• Status: Published

Opinions

OPINION

By the Court,

Leavitt, L:

This is a defamation and interference with contract case arising out of a labor dispute between non-party subsidiaries of appellants Sahara Gaming Corporation (Sahara Gaming) and Sahara Mission Valley (Sahara Mission) (collectively Sahara), and respondents, a labor union and its affiliates (collectively, the Union).

At the time of the labor dispute, Sahara Gaming was negotiating a multi-million dollar contract with Players International concerning a land sales and management agreement. The Union became aware of the negotiations and sent a letter to Players International asking it not to enter into a contract with Sahara Gaming. The letter accurately quoted a portion of a complaint filed in Mississippi which alleged that Sahara Gaming had committed fraud in another casino deal. Sahara alleges the Union republished the allegations presented in the complaint with full knowledge the statements were false and with the intent to cause harm to Sahara.

We must decide as a matter of law if a republication of a judicial proceeding constitutes an absolute privilege, when the statements are false or malicious and are republished with the intent to harm another. We hold the privilege is absolute.

Sahara Mission entered into a written agreement to sell real property to Players International for a sum in excess of $15,000,000.00. The agreement further provided Players International would pay Sahara Mission a management consulting fee of $2,900,000.00. In the letter to the Chairman and Chief Executive Officer of Players International the Union informed it that a “contentious labor dispute” existed between Sahara and the Union and that by “acquiring the Henderson property, Players is putting itself in the middle of this dispute.” The letter further quoted from a complaint filed in a lawsuit in Mississippi involving Sahara and Treasure Bay Gaming & Resorts, Inc., wherein Sahara was being sued concerning a gaming management agreement, as follows:

The representations Lowden made to Miller¹ to induce Miller to proceed with Lowden’s plan and transfer his assets to Treasure Bay were false. At the time Lowden made the representations, neither he nor Sahara intended to staff Treasure Bay’s casinos with experienced managers or experienced marketing staff employed by Sahara. Nor did Lowden or Sahara intend to fulfill its duties as loyal agents in managing the Treasure Bay casinos. In addition, the budget projections Lowden and Sahara provided misrepresented the expenses Lowden and Sahara knew it would incur in opening the casinos.

Approximately two weeks after the letter was sent, Players International cancelled the management consulting agreement.

Sahara filed suit against the Union alleging that the Union republished Miller’s statements in the complaint filed in the Mississippi action knowing they were false or with reckless disregard for the truth or falsity of the allegations. It further alleged the Union published the matter with ‘ ‘wrongful and willful intent to injure” Sahara. In addition Sahara filed claims for civil conspiracy, interference with contract, and interference with prospective economic advantage.

Union filed for summary judgment on the defamation and civil conspiracy claims; the district judge granted the motion and ordered summary judgment be entered on the two claims. The district judge reasoned as to the defamation claim that the letter accurately quoted the allegations contained in the Mississipi complaint in that it was a “fair and true recital” and “any person has a right to make a fair recital about a court case.” As to the civil conspiracy claim, the court reasoned that it was derivative of the defamation claim and also granted summary judgment in favor of the Union on that cause of action. Subsequently, the district judge granted summary judgment in favor of the Union on the interference with contract and interference with prospective economic advantage claims on the ground that they, too, were derivative of the defamation claim.²

The purpose of summary judgment “is to avoid a needless trial when an appropriate showing is made in advance that there is no genuine issue of fact to be tried, and the movant is entitled to judgment as a matter of law.” Coray v. Hom, 80 Nev. 39, 40-41, 389 P.2d 76, 77 (1964). “In determining whether summary judgment is proper, the nonmoving party is entitled to have the evidence and all reasonable inferences accepted as true.” Wiltsie v. Baby Grand Corp., 105 Nev. 291, 292, 774 P.2d 432, 433 (1989) (citing Johnson v. Steel, Incorporated, 100 Nev. 181, 183, 678 P.2d 676, 677 (1984)). “Orders granting summary judgment are reviewed de novo.” Bulbman, Inc. v. Nevada Bell, 108 Nev. 105, , 825 P.2d 588, 591 (1992) (citing Tore, Ltd. v. Church, 105 Nev. 183, 185, 772 P.2d 1281, 1282 (1989)).

There is no factual dispute here that the Union’s letter was a fair and accurate report of the complaint in the Mississippi litigation; instead, Sahara is asserting that the report was made with malice and with intent to harm.

The law has long recognized a special privilege of absolute immunity from defamation given to the news media and the general public to report newsworthy events in judicial proceedings. Although the courts are open to the public, not everyone can attend hearings. The news media acts as an agent of the people to inform the public what transpires in the courtroom and to ensure the fairness of the proceedings. In exchange for this absolute privilege, comes the requirement and responsibility that the report be fair, accurate, and impartial. Opinions must be left to the editorial pages or editorial segments of television broadcasts.

Although the privilege is usually directed toward the news media and others engaged in reporting news to the public, it is not limited to republication by these publishers, but extends to any person who makes a republication of a judicial proceeding from material that is available to the general public. See Restatement (Second) of Torts § 611 cmt. c (1977). Here, the complaint was readily available for public inspection as a pleading in a judicial proceeding.

This court first set forth the rule prior to the turn of the century when it stated in Thompson v. Powning, 15 Nev. 195, 203 (1880), the following:

A fair and impartial account of the proceedings in a court of justice is, as a general rule, a justifiable publication. Proprietors of newspapers are not to be punished for publishing a fair, full, and true report of judicial proceedings, except upon actual proof or [sic] malice in making the report. The reason for this rule is, that the public have [sic] a right to know what takes place in a court of justice, and unless the proceedings are of an immoral, blasphemous, or indecent character, or accompanied with defamatory observations or comments, the publication is privileged.

(Citations omitted.)

This early ruling seems to grant only a conditional privilege; if the report is made with actual malice or accompanied with defamatory opinions, the privilege is abused and lost. However, this court later established a new absolute privilege rule. The court held that defamatory matter published from a judicial proceeding is absolutely privileged ‘ ‘provided the answers of the witness are relevant and pertinent to the subject of inquiry, whether or not they are false or malicious.” Nickovich v. Mollart, Et Al., 51 Nev. 306, 313, 274 P. 809, 810 (1929) (emphasis added). The court later extended the absolute privilege to quasi-judicial proceedings saying, “By granting an absolute privilege to statements made before a quasi-judicial body, the right of individuals to express their views freely upon the subject under consideration is protected.” Knox v. Dick, 99 Nev. 514, 518, 665 P.2d 267, 270 (1983).

This court reaffirmed the absolute privilege rule in Circus Circus Hotels v. Witherspoon, 99 Nev. 56, 60, 657 P.2d 101, 104 (1983), wherein we stated:

[There] is [a] long-standing common law rule that communications uttered or published in the course of judicial proceedings are absolutely privileged so long as they are in some way pertinent to the subject of controversy. The absolute privilege precludes liability even where the defamatory statements are published with knowledge of their falsity and personal ill will toward the plaintiff.

(citations omitted) (referring to NRS 612.265(7)³ in which the rule has been codified as to communications from an employer as to the Employment Security Division pursuant to Chapter 612). This court further explained as follows: “The policy underlying the privilege is that in certain situations the public interest in having people speak freely outweighs the risk that individuals will occasionally abuse the privilege by making false and malicious statements.” Id. at 61, 657 P.2d at 104 (citing Ducosin v. Mott, 642 P.2d 1168, 1170-71 (Or.. 1982)); see Knox, 99 Nev. at 517-18, 665 P.2d at 270. This court further stated, “On the basis of this policy, the absolute privilege attached to judicial proceedings has been extended to quasi-judicial proceedings before executive officers, boards, and commissions, including proceedings in which the administrative body is considering an employee’s claim for unemployment compensation.” Id. at 61, 657 P.2d at 104 (citing Krenek v. Able, 594 S.W.2d 821, 823 (Tex. Civ. App. 1980)).

In a claim for defamation and intentional infliction of emotional distress, this court extended the absolute privilege rule to occasions where a citizen files a complaint with an internal affairs bureau against a police officer. We stated, “The extension of the privilege promotes the public’s interest by allowing civilian complaints against public officials to be aired in the proper forum without fear of civil liability.” Lewis v. Benson, 101 Nev. 300, 301, 701 P.2d 751, 752 (1985) (citing Campo v. Rega, 433 N.Y.S.2d 630, 631 (App. Div. 1980)). This court concluded, “Thus, the application of an absolute privilege to civilians filing complaints with an internal affairs bureau sufficiently promotes the interest of the public to warrant the availability of an absolute privilege.” Id. at 301, 701 P.2d at 752.

Additionally, defamatory statements made by an attorney during a medical malpractice case were absolutely privileged when the attorney referred to the defendant doctor as “incompetent, a fumble-fingered fellow, a liar, a scoundrel, a damned idiot.” Bull v. McCuskey, 96 Nev. 706, 708, 615 P.2d 957, 961 (1980), overruled on other grounds by Ace Truck v. Kahn, 103 Nev. 503, 746 P.2d 132 (1987). The attorney also said of the doctor, “[h]e will lie under oath, steal an elderly woman’s redress, cheat if he can get away with it, and all that is left for him is to make a pact with the devil and murder those who would oppose him.” Id. at 708-09, 615 P.2d at 961. This court said, “As a general proposition an attorney at law is absolutely privileged to publish defamatory matter concerning another in communications preliminary to a proposed judicial proceeding, or in the institution of, or during the course and as part of, a judicial proceeding in which he participates as counsel, if it has some relation to the proceeding.” Id. at 711-12, 615 P.2d at 961 (quoting Restatement (Second) of Torts § 586 (1977)); see Richards v. Conklin, 94 Nev. 84, 84-85 575 P.2d 588, 589 (1978). This court reasoned that the statements “may be understood to pertain to either the doctor’s competence or his credibility, and therefore, are privileged.” Id. at 712, 615 P.2d at 961. This court further reasoned, “The privilege rests upon a public policy of securing to attorneys as officers of the court the utmost freedom in their efforts to obtain justice for their clients.” Id. The court did not condone the statements, however, and said, “[Ajlthough the denigrative comments of attorney Bull regarding the doctor were privileged, and alone would not supply a basis for liability in damages, it does not follow that an attorney may so conduct himself without fear of discipline.” Id. The court then pointed out the attorney’s oath and standards of conduct under the Supreme Court Rules could subject him to discipline. Id., 615 P.2d at 962.

This court has also held that the absolute privilege rule applies to letters written in anticipation of litigation. Specifically such letters are “subject to both an absolute and qualified privilege.” Richards, 94 Nev. at 85, 575 P.2d at 589 (citing Romero v. Prince, 513 P.2d 717, 719-20 (N.M. App. 1973)).

Thus, we have recognized the absolute privilege rule as to communications uttered or published in the course of judicial proceedings and extended the privilege to quasi-judicial hearings, complaints filed with an internal affairs bureau against a police officer, and even letters written in anticipation of litigation. Certainly, the pleading in this case, a formal complaint, is covered under the rule of absolute privilege.

Other jurisdictions have adopted the rule: “The general rule is that allegations in pleadings made in the course of judicial proceedings are absolutely privileged if they bear a reasonable relationship to the subject of the action.” Shipley v. Howard, 519 P.2d 1230, 1231 (Colo. Ct. App. 1974). Defamatory statements contained in pleadings are absolutely privileged if they are relevant to the subject of inquiry. See Bailey v. Superior Court, Etc., 636 P.2d 144, 146 (Ariz. Ct. App. 1981) (citing Sierra Madre Dev., Inc. v. Via Entrada Town. Ass’n, 514 P.2d 503, 506-07 (Ariz. Ct. App. 1973)). “[DJefamatory matter injudicial pleadings, even if false and malicious, is absolutely privileged” when “reasonably related” to the matter involved. Stryker v. Barbers Super Markets, Inc., 462 P.2d 629, 631 (N.M. Ct. App. 1969); see accord Neece v. Kantu, 507 P.2d 447, 452 (N.M. Ct. App. 1973). “Pleadings are absolutely privileged” and “existence of malice . . . cannot support a claim for defamation.” Gem Trading Co., Inc. v. Cudahy Corp., 603 P.2d 828, 832 (Wash. 1979). “Absolute immunity [is granted] to all statements made in the course of, or incidental to, a judicial proceeding, so long as they are relevant to the proceedings.” Vasquez v. Courtney, 557 P.2d 672, 673 (Or. 1976) (citing Ramstead v. Morgan, 347 P.2d 594, 596 (Or. 1959)). Publications made in the course of judicial proceedings are absolutely privileged. See Albertson v. Raboff, 295 P.2d 405, 409 (Cal. 1956), partially abrogated by Cal. Civ. Code. § 47(b) (West 1999). “Defamatory words, published by parties, counsel or witnesses in the course of a judicial procedure” and which are “connected with, or relevant or material to, the cause in hand or subject of inquiry,” constitute an absolutely privileged communication, and “no action will lie therefor, however false or malicious they may in fact be.” Hammett v. Hunter, 117 P.2d 511, 512 (Okla. 1941).

On the question of the relevancy requirement, this court has concluded, “[T]he test of relevancy is very broad. The defamatory material need not be relevant in the traditional evidentiary sense, but need have only ‘some relation’ to the proceeding; so long as the material has some bearing on the subject matter of the proceeding, it is absolutely privileged.” Circus Circus, 99 Nev. at 61, 657 P.2d at 104 (quoting Restatement (First) of Torts § 587 (1938)).

Since the Union’s alleged defamatory statements were a fair and accurate report of a judicial proceeding, they are absolutely privileged, and the material recited will not support a defamation suit even if the statements were made maliciously and with knowledge of their falsity. This has been the policy and rule in Nevada for the last seventy years and the privilege includes administrative hearings, quasi-judicial proceedings as well as judicial actions. It is in the public’s interest to have litigants speak freely in pleadings and while testifying during a trial or hearing without fear of civil liability. It is the news media and public’s right to know what transpires in the legal proceedings of this state and that is paramount to the fact someone may occasionally make false and malicious statements. It is the court or administrator’s function to search out and find the truth in all litigation.

The district court ruled correctly in granting summary judgment for the Union.

Sahara also filed claims for interference with contract, civil conspiracy, and interference with prospective economic advantage but concedes if the defamatory statements are privileged, then those claims are derivative of the defamation claim or are subject to federal preemption.

Accordingly, we affirm the district court’s orders granting summary judgment.⁴

Sullivan, D. J., concurs.

1 Lowden is Sahara’s Chairman and Chief Executive Officer. Miller is Francis L. Miller, the founder and former Chairman and Chief Executive Officer of Treasure Bay.

2 Although the dismissal of the interference with contract claims was presented to the district court upon a NRCP 12(c) motion, matters outside the pleadings were presented to the district court, and the motion was treated as one for summary judgment under NRCP 56. See NRCP 12(c).

3 This provision has been renumbered as NRS 612.265(12) and now reads as follows:

All letters, reports or communications of any kind, oral or written, from the employer or employee to each other or to the division [employment security department] or any of its agents, representatives or employees are privileged and must [shall] not be the subject matter or basis for any lawsuit if the letter, report or communication is written, sent, delivered or prepared pursuant to the requirements of this chapter.

New wording is noted in bold and prior wording is in brackets.

4 The Honorable Jerry V. Sullivan, Judge of the Sixth Judicial District Court, was designated by the Governor to sit in place of The Honorable A. William Maupin, Justice. Nev. Const, art. 6, § 4.