Denise Rich Songs, Inc. v Hester

[*1] Denise Rich Songs, Inc. v Hester 2004 NY Slip Op 51360(U) Decided on October 4, 2004 Supreme Court, New York County Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on October 4, 2004
Supreme Court, New York County

DENISE RICH SONGS, INC., IGD MUSIC & MEDIA, INC. and DENISE RICH, Plaintiffs,

against

JAMES H. HESTER, Defendant.



602639/03

Joan A. Madden, J.

In this action for monetary damages and injunctive relief, plaintiffs allege that the allegations contained in a certain paragraph of a Federal court complaint in an employment discrimination action commenced by defendant James H. Hester ("Hester") against Denise Rich ("Rich") and others, and the disclosure of that and other information to the press, violated a confidentiality agreement and release entered into by the parties. Plaintiffs are now moving for an order pursuant to CPLR 3024 compelling defendant to answer certain questions at deposition. Defendant opposes the motion and cross-moves for an order pursuant to CPLR 3212 granting summary judgment dismissing the complaint, on the grounds that notwithstanding the confidentiality agreement and release, the absolute privilege protecting statements made in a judicial proceeding and the fair reporting privilege of Civil Rights Law §74, both bar plaintiffs from maintaining their claims based on alleged violation of those agreements. Alternatively, defendant moves for an order pursuant to CPLR 3024 compelling plaintiffs to answer certain questions at deposition.

The following facts are not disputed. From 1996 to 2002, Hester worked for Rich, as a publicist to promote Rich as a songwriter and place songs she had written on various albums. On June 7, 2001, the parties executed a Work for Hire Acknowledgment and Confidentiality Agreement (the "confidentiality agreement"), in which Hester agreed not to disclose "certain proprietary and confidential information" and "competitively sensitive data and information," and "Trade Secrets." On that same date, the parties executed a letter agreement and a Mutual Release (the "release"), in which plaintiffs agreed to pay Hester $320,000 in "full and final settlement of Hester's claim for payment in connection with his provision of services . . . for the period beginning January 1, 1999 and ending on June 30, 2001." The parties also agreed to keep the terms of the release confidential, and "not to criticize, denigrate or disparage the other in any manner whatsoever to any third party."

On August 1, 2003, Hester commenced the underlying action for employment discrimination in the United States District Court for the Southern District of New York, entitled James H. Hester v. Denise Rich, 1600 Broadway Inc., IGD Music & Media Inc. and Denise Rich [*2]Songs, Inc.. Seeking $30 million in damages and injunctive relief, Hester alleged that defendants unlawfully discriminated against him on the basis of sexual orientation and disability when he was discharged after he informed defendants that he had tested positive for HIV. Stating that Hester was paid an annual salary of $240,000, the complaint detailed the negotiations leading up to the execution of the employment and settlement agreements, and alleged that "throughout the course of the employment negotiations, Defendants unfairly exerted pressure and duress on plaintiff by withholding thousands of dollars (approximately $320,000) of pay he had already earned." The complaint further alleged that at the last minute the settlement documents were altered "to create an independent contractor relationship" and that in June 2001, Hester "was induced to sign the changed documents by duress and by defendants' withholding $320,000 of back pay and by Rich's continued assurances that plaintiff would be given all insurance coverage and all other benefits as an employee."

Paragraph 18 of the complaint contains the following allegations:

18. Among other demands, and over plaintiff's objections, Rich insisted in October 1999 that plaintiff make a $2,000 political contribution to Hillary Clinton that would be refunded by Rich. It was clear to plaintiff that this demand was made so that Rich could disguise the source of the contribution and on that

ground, plaintiff repeatedly asked that he not be made to participate and that the contribution be made direct. Rich insisted, plaintiff made the contribution and was reimbursed.

On August 2, 2003, the New York Post and the New York Daily News published articles about Hester's employment discrimination action against Rich. Both articles focused on the allegations in paragraph 18 of the complaint regarding the $2,000 political contribution to Hillary Clinton. The headline on the Post article read "New Rich $candal; Suit: Denise 'hid' donation to Hillary." The headline on the News article read "Clinton's pal Rich hit with bias lawsuit."

The Post article reported that Hester was hired in April 1996 and paid a salary of $240,000 year, and that "Hester claims Rich forced him to make the donation while he was negotiating the terms of his employment contract. Rich had promised him a written employment contract and full medical coverage for years, he claims. But during the final stages of negotiations in June 2001, Rich's lawyer, Lee Goldberg altered the employment documents to make Hester an independent contractor, the suit says." The Post article included a quoted statement from Hester's counsel, Pitkin Marshall: "'It was clear to [Hester] that this demand was made so that Rich could disguise the source of the contribution,' said Hester's civil lawyer, Pitkin Marshall."

The News article described Hester's allegations regarding the contribution to Hillary Clinton, and reported that "Hester's lawyer, Pitkin Marshall, said federal authorities were aware of the contribution. He said the demand for money came as Hester was negotiating an employment contract with Rich at a time when she allegedly owed him $320,000 in back pay. 'She pretty much owned his life,' said Marshall." The article also discussed the federal investigation of the pardon that Denise Rich's husband, Marc Rich, received from President Clinton, along with the allegations in the Federal complaint as to the circumstances under which Rich fired Hester. [*3]

Attorney Marshall admits that on August 1, 2003, reporters from the Post and the News contacted his office and asked to interview Hester about the Federal court discrimination action. Marshall submits an affirmation that he informed the reporters Hester would not speak to them and declined to give them Hester's telephone number. Marshall did, however, provide the reporters with a statement "comment[ing] only on facts, issues and matters that had been described in the complaint in the Federal Discrimination Case." Marshall also states that the Post and the News obtained copies of the Federal court complaint "through their own resources, with no initiation either direct or indirect, by Hester or anyone else on his behalf."

By an opinion filed August 19, 2004, The Honorable Denny Chin resolved Hester's Federal court discrimination action, by granting defendants' motion for summary judgment and dismissing the complaint. Hester v. Rich, NYLJ, August 26, 2004, p.21, col.5, 2004 WL

1872296 (S.D.NY), reargument and reconsideration denied, 2004 WL 2049271 (September 13, 2004).

In the meantime, on or about August 20, 2003, plaintiffs commenced the instant action against Hester in this court, alleging that Hester and his attorney "disclosed and distributed [Hester's] federal court summons and complaint to tabloid press," and that the Post and News articles "both contain allegations by defendant that plaintiffs forced defendant to make a campaign contribution to Hillary Clinton in 1999 and both articles contain quotes by defendant's attorney, Pitkin Marshall, concerning the defendant's alleged contribution." The complaint further alleges that in the Post and News articles, "defendant and/or his agents and representatives also disclosed the financial terms of his independent contractor relationship with plaintiffs."

By a decision and order dated September 22, 2003, this court denied plaintiffs' motion for a preliminary injunction.[FN1] As indicated above, Hester is now seeking to dismiss on the grounds, inter alia, that any information allegedly disclosed in violation of the confidentiality agreement and release is absolutely privileged under either the common law privilege applicable to statements made in the course of judicial proceedings, or the statutory "fair reporting privilege" of Civil Rights Law §74.[FN2]

It has long been the law that statements made in the course of judicial proceedings are absolutely privileged, even if purportedly made in violation of a confidentiality agreement, see Arts4All, Ltd v. Hancock, 5 AD3d 106, 108 (1st Dept 2004), if, by any view or under any [*4]circumstances, they may be considered pertinent to the litigation. See Youmans v. Smith, 153 NY 214, 219 (1897); Martirano v. Frost, 25 NY2d 505, 508 (1969); Park Knoll Assocs. v. Schmidt, 59 NY2d 205, 209-210 (1983); Ticketmaster Corp. v. Lidsky, 245 AD2d 142 (1st Dept 1997). "[A]ll that is required for a statement to be privileged is a minimal possibility of pertinence or the simplest rationality." Mosesson v. The Jacob D. Fuchsberg Law Firm, 257 AD2d 381, 382 (1st Dept), lv app den 93 NY2d 808 (1999). Pertinency is a question of law for the court, and any doubt shall be resolved in favor of relevancy and pertinency. Id.

Applying this standard, the court finds that the allegations in paragraph 18 of the Federal complaint as to the $2,000 political contribution were pertinent and relevant to at least two causes of action in that complaint. Hester asserted causes of action for discrimination under the New York State Human Rights Law and Title VII, both of which provide a remedy only to workers who are "employees" as opposed to an "independent contractors." See Scott v. Massachusetts Mutual Life Insurance Co., 86 NY2d 429, 433 (1995); Eisenberg v. Advance Relocation & Storage, Inc., 237 F3d 111 (2nd Cir 2000). The determination of whether an employer-employee relationship exists rests upon evidence that the employer exercises control over either the results produced or the means used to achieve the results. Scott v. Massachusetts Mutual Life Insurance Co., supra at 433; Murphy v. ERA United Realty, 251 AD2d 469, 470 (2nd Dept 1998).

In the factual portion of the discrimination complaint, Hester alleged that starting in 1996, he was a "full time employee of defendant Denise Rich" and that "[a]lthough Rich took certain steps to further the premise that plaintiff was a independent contractor, he was in reality an employee." These allegations are followed by a list describing his specific job responsibilities and the degree to which Rich controlled his work. The record reveals that on June 7, 2001, the parties executed a letter agreement entitled "Independent Contractor Payments," in which Denise Rich and two related entities agreed to pay Hester $320,000 in return for his executing the confidentiality agreement and the release.

Reading paragraph 18 in context of the totality of the complaint, it is clear that a potential issue existed as to whether Hester was an employee or an independent contractor, and the allegation that Rich "induced" and "demanded" that Hester make a purportedly illegal political contribution, is evidence arguably tending to show that Rich had a high degree control over Hester. Hester provides copies of the papers submitted in connection with the Federal court summary judgment motion, which show that one of the issues raised was Hester's status as an employee, and that Hester explicitly asserted that Rich "compelled him to make political donations to political candidates, Al Gore and Hillary Clinton," as one fact among others in support of his contention that he was an employee.[FN3] [*5]

Plaintiffs also object to the allegations in the Federal court complaint referring to the terms of Hester's employment relationship with Rich and the financial terms of that relationship. As Hester was asserting claims for employment discrimination, any allegations concerning the terms of that employment, are necessarily relevant to those claims.

Thus, as the statements in the Federal court complaint regarding Hester's political contributions and employment relationship, were pertinent and relevant to his claims for employment discrimination in that action, they are absolutely privileged. See Martirano v. Frost, supra at 508; Mosesson v. The Jacob D. Fuchsberg Law Firm, supra at 382; Ticketmaster Corp. v. Lidsky, supra at 142.

Turning to the statements in the newspapers articles, Civil Rights Law §74 creates a fair reporting privilege which forbids the maintenance of a civil action "against any person, firm or corporation, for the publication of a fair and true report of any judicial proceeding." Misek-Falkoff v. American Lawyer Media, Inc., 300 AD2d 215 (1st Dept 2002), lv app den 100 NY2d 508 (2003). "The privilege with respect to judicial proceedings exists because of the 'public interest in having proceedings of courts of justice public, not secret, for the great security thus given for the proper administration of justice.'" Branca v. Mayesh, 101 AD2d 872, 873 (2nd Dept), aff'd 63 NY2d 994 (1984)(quoting Lee v. Brooklyn Union Pub. Co., 209 NY 245, 248 [1913] ). Historically, the statutes preceding Civil Rights Law §74 limited the privilege to members of the media acting without malice, but the protection of section 74 extends to "any person" regardless of whether she or he acts with malice. Williams v. Williams, 23 NY2d 592, 597 (1969); Branca v. Mayesh, supra. "For a report to be characterized as 'fair and true' . . . it is enough that the substance of the article be substantially accurate. . .[T]he language used therein should not be dissected and analyzed with a lexicographer's precision." Holy Spirit Ass'n for the Unification of World Christianity v. New York Times Co., 49 NY2d 63, 67 (1979); see also Misek-Falkoff v. American Lawyer Media, supra.

Here, taking the statements attributed to Hester and his counsel in the newspaper articles, and comparing them with the allegations set forth in the complaint in the Federal court action, which was the subject of those articles, leads to the conclusion that the statements constitute a substantially accurate report of a judicial proceeding, and thus, are privileged under Civil Rights Law §74. The statements by Hester's counsel to the press and those attributed to Hester in the articles, accurately reflect the substance of Hester's Federal discrimination claims and neither suggest more egregious conduct than that recounted in the complaint, nor present the purported wrongdoing as established fact rather than allegation. Hughes Training Inc. v. Pegasus Real-Time Inc., 255 AD2d 729, 730 (3rd Dept 1998).

In speaking to the press, Hester's counsel simply described his client's position in the lawsuit, and the underlying factual and legal bases for the claims as set forth in the complaint. Any statements attributed to Hester were lifted directly or paraphrased from the allegations in the complaint. While plaintiffs assert that Hester or his attorney Marshall provided the complaint to the press, they have provided no evidentiary proof in admissible form to refute Hester's sworn testimony and statement that he did not forward a copy of the complaint to anyone in the news media, or Marshall's affirmation that he did not initiate contact with the press.

In opposing Hester's cross-motion for summary judgment, plaintiffs have not identified any statement by Hester or his counsel which cannot be regarded as a substantially accurate [*6]report of the allegations in the Federal complaint, i.e. a statement which considered in its context suggests more serious conduct that actually suggested in the underlying complaint. Daniel Goldreyer, Ltd. v. Van de Wetering, 217 AD2d 434, 435-436 (1st Dept 1995). Although Williams v. Williams, supra, creates an exception to the absolute privilege of Civil Rights §74, plaintiffs have not produced any evidentiary proof showing or tending to show that Hester instituted the Federal court action solely as a shield against liability for disseminating information in violation of the confidentiality agreement and release. Plaintiffs have submitted no affidavits, documents or sworn testimony to support their bare and conclusory allegations that Hester instituted the Federal court action maliciously and solely for the purpose of "disclosing erroneous information such as Rich's involvement in illegal campaign contributions," and "embarrassing Rich in an attempt to extort a settlement." Branca v. Mayesh, supra. The Court notes that plaintiffs have not asserted any claim against Hester for defamation or libel, based upon any statements in the complaint or to the press.

Thus, as the allegations in the Federal court complaint are absolutely privileged under the common law privilege applicable to statements made in the course of legal proceedings, and the statements in the newspaper articles are protected under the absolute privilege of Civil Rights

Law §74, plaintiffs' first and second causes of action based upon those allegations and statements, must be dismissed.

In light of this determination, the Court need not resolve the additional grounds for dismissal raised in defendant's cross-motion, and plaintiff's motion to compel discovery is denied as moot.

Accordingly, it is hereby

ORDERED that defendant's cross-motion for summary judgment is granted and the First and Second Causes of Action are dismissed, and the Clerk is directed to enter judgment dismissing the complaint in its entirety; and it is further

ORDERED that plaintiff's motion to compel discovery is denied as moot.

DATED: October 4 , 2004ENTER:

/S

_________________________ J.S.C. Footnotes

Footnote 1:Defendant also moved dismiss the complaint, which was granted in part only to the extent of dismissing the third and fourth causes of action, which sought damages on the theory that Hester should reimburse plaintiffs for monies they expended to settle a sexual harassment claim based on Hester's abusive conduct toward a co-employee.

Footnote 2:Contrary to plaintiffs' assertion, defendant's cross-motion for summary judgment does not violate the rule against successive motions. This court's order of September 23, 2003 noted that defendant's initial motion for summary judgment was premature, as issue had not yet been joined. The court, however, granted the motion in part, essentially treating it as a pre-answer motion to dismiss pursuant to CPLR 3211 for failure to state a cause of action.

Footnote 3:It is not significant that the Federal court's opinion does not address this specific allegation, as Judge Chin assumed for the purposes of the motion that Hester was an employee, and decided only the ultimate question of whether Hester presented sufficient evidence from which a reasonable jury could find that he was discharged because of his HIV status or sexual orientation. Hester v. Rich, NYLJ, August 26, 2004, p.21, col.5 (S.D.NY).