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Former Cooperative Board President’s Defamation Claim Allowed To Proceed

A group of tenant-shareholders in a residential cooperative set up a website whose contents were highly critical of the then-President of the Board of Directors. The Board President asserted that the website’s contents went beyond legitimate criticism and crossed the line into defamation, and he sued the shareholders.  The shareholders moved to dismiss the action, but the court denied the motion and allowed the action to proceed.  Trump Village Section 4 v. Bezvoleva, Index No. 509277/2014, NYLJ 1202736140848 (Sup. Ct. Kings Co. Aug 10, 2015).


According to the court’s opinion, the website included contributions by two named shareholders of the Cooperative and two anonymous commentators. Postings on the site asserted, among other things, that the plaintiff caused the Cooperative to file frivolous litigation against shareholders who opposed his views; that elections of directors were not conducted fairly and that the results were manipulated and fabricated; that the Cooperative discriminated against military personnel and veterans and received “shady contributions” from vendors; that vendors were being overpaid after having made contributions to the plaintiff’s unsuccessful campaign for public office; and that the plaintiff spent the Cooperative’s money for personal expenses.  The plaintiff alleged that these statements were false, that they were defamatory, and that a reader would take them to be statements of fact rather than merely of the speakers’ opinion.


The defendant shareholders asserted that they could not be liable for libel because their communications are protected by the “common interest privilege” because they were communicating their concerns about the Board President’s conduct to other shareholders of the Cooperative. The court described the common interest privilege as “a qualified common-law privilege for statements made by one person to another on a subject in which both persons share a common interest.” Rejecting this defense, the court observed that in this case, defendants’ website was accessible not only to other shareholders, but was posted on the World Wide Web and hence could be read by any member of the general public, without restriction or limitation.  Indeed, the court observed that when the plaintiff’s name is input into a search engine, this website is one of the top-ranking search results.  Such “excessive publication” of the allegedly defamatory content went beyond the scope of any common interest privilege.


The court also rejected the defense’s contention that as directors of a large residential cooperative, the Board President and other directors were “limited public figures,” who cannot recover for defamation unless the defendants’ “actual malice,” meaning either actual knowledge that the statements were false or reckless disregard of the truth, was shown. The court disagreed, finding that the directors did not “voluntarily thrust themselves into a public controversy or seek any public attention with respect to any public controversy.”  Moreover, the court held, the disagreements among the shareholders “cannot be said to be matters of a controversy affecting the public.”


The court acknowledged that a reasonable person would be inclined to discount the credibility of statements posted on the Internet, as opposed to other forms of communications. Nonetheless, “Internet postings are not exempt from being libelous where they do not constitute opinion, particularly where, as here, they are based upon undisclosed facts. . . .  Furthermore, the alleged defamatory statements were made on a website which purports to represent and be knowledgeable” about the Cooperative’s affairs.  Accordingly, the motion to dismiss was denied and plaintiffs were permitted to pursue their defamation claim.