Comments on Recent Cases: November 2020

Part of my work involves reading court decisions to keep abreast of how judges decide the types of cases I handle. Below, I share some thoughts on recent decisions.

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Courts May Be Skeptical of Some Applications for Discovery in Aid of Foreign Litigation

Litigants from outside of the United States can seek assistance from American courts in obtaining evidence here. And while courts often grant these requests, they apply a rigorous test to determine whether to do so and reject some applications.

In a recent decision, the federal court in Manhattan denied a request by Nigerian prosecutors for discovery they claimed was for use in a criminal proceeding abroad. The respondents argued that the prosecutors actually wanted the discovery for use in a proceeding to enforce an arbitration award, which is not a permitted use. The court agreed, especially in light of the prosecutor’s decision not to use a special procedure codified in a treaty with Nigeria.

Decisions like these provide guidance for parties seeking discovery, and precedent for respondents seeking to avoid discovery by arguing that the petitioner will not use it appropriately.

Courts Often Shield Litigants from Defamation Claims Arising From Their Legal Arguments

Earlier this year, I wrote a post about negative publicity that comes with being in a lawsuit. One issue I discussed was that defendants are often hurt when plaintiffs publicly allege negative things about them in court. Despite the pain, defendants may not succeed in suing for defamation in response.

An appellate court in Manhattan recently affirmed this principle. In that case, a state legislator claimed immunity from defamation claims arising from criticisms he made about the plaintiff and his lawsuit. The court held that the legislator was not immune from defamation claims generally as a legislator, but was immune for claims specifically about the original lawsuit since has the right to respond to allegations against him.

Cases like these should remind litigants that courts generally will not stop their adversaries from portraying them negatively. Avoiding litigation and affirmatively vindicating the merits of claims are often the best means available for a party to clear his or her name.

New York Courts Distinguish Fraud Claims from Contract Claims

Plaintiffs often allege fraud when really their complaint is for breach of contract. People naturally feel like they were the victim of a fraud when they perform an agreement but their counterparty does not. But New York courts distinguish between a failure to live up to a future promise and a false statement of fact.

As an example, a Manhattan state appellate court recently affirmed the dismissal of a fraud claim brought by a borrower who signed a “term sheet” with the terms of a loan from the defendant. But before signing a formal agreement, the defendant backed away. The plaintiff claimed the defendant defrauded them, since it never intended on making the loan. The court dismissed the claim before discovery, saying while a fraud claim could stand if the plaintiff had alleged “specific facts” that indicated that the defendant never intended on making the loan, “general allegations of lack of intent were insufficient.”

Even without a fraud claim, Plaintiffs can still sue for breach of contract, and often recover the same amount. But the distinction between contract and fraud claims is important when preparing a complaint that will survive a motion to dismiss.