Saye v. Deloitte & Touche, Llp

670 S.E.2d 818

295 Ga. App. 128

SAYE v. DELOITTE & TOUCHE, LLP.

No. A08A1172.

Court of Appeals of Georgia.

November 25, 2008.

Reconsideration Denied December 11, 2008.

Buckley & Klein, Edward D. Buckley III, Atlanta, John Franklin Beasley Jr., Athens, for appellant.

Sutherland, Valerie Strong Sanders, Amelia Toy Rudolph, Atlanta, for appellee.

BERNES, Judge.

Catherine C. Saye sued Deloitte & Touche, LLP for libel, slander, and tortious interference with business and employment relations based upon statements that a partner of Deloitte made to her employer. The trial court dismissed her claims after concluding that the alleged defamatory statements were inactionable privileged communications that had not been published. Because we find that the privilege protecting Deloitte remains dependent upon a finding that the statements were made without malice and that the publication element of the defamation claims was met, we reverse.

We review de novo the trial court's ruling on a motion to dismiss. Lyon v. Schramm, 291 Ga.App. 48, 49, 661 S.E.2d 178 (2008). "Our role is to determine whether the allegations of the complaint, when construed in the light most favorable to the plaintiff, and with all doubts resolved in the plaintiff's favor, disclose with certainty that the plaintiff would not be entitled to relief under any state of provable facts." (Citation and punctuation omitted.) Id.

Saye has alleged that, in December 2005, she was hired by Wayne Farms, LLC, a subsidiary of ContiGroup Companies, Inc., as its corporate controller. She reported directly to the company's chief financial officer. ContiGroup employed Deloitte for its auditing needs.

In or around March 2006,¹ a Deloitte partner contacted the chief financial officer of ContiGroup and advised him that his company should terminate Saye based upon alleged information that Deloitte possessed but was unable to share with ContiGroup due to client confidentiality. ContiGroup hired an independent company to conduct a full investigation of Saye, following which a determination was made to retain her services and seek a retraction from Deloitte.

In July 2006, a deputy managing partner of Deloitte sent a letter to the president and CEO of ContiGroup that stated as follows:

Based upon information in Deloitte & Touche LLP's possession, including but not limited to the [independent report] ... and confidential information obtained as a result of services to another client, Deloitte & Touche LLP ... is not willing to rely on the representations of Catherine C. Saye for purpose of the audits of the financial statements of Wayne Farms LLC and ContiGroup ... and Deloitte & Touche LLP will not be in a position to conduct audits in accordance with generally accepted auditing standards of the financial statements of both Wayne Farms LLC and ContiGroup if Catherine C. Saye is in a financial reporting or accounting role, or otherwise serves as an officer of Wayne [F]arms LLC or ContiGroup.

Saye alleges that the oral and written statements made by Deloitte to ContiGroup were made with malice and without any factual basis and, as a result, she was terminated from her position with Wayne Farms. Based upon these communications, she filed suit against Deloitte for defamation by slander, defamation by libel, and tortious interference with business and employment relations and sought punitive damages and attorney fees.

The trial court granted Deloitte's motion to dismiss on the grounds that Deloitte's communications were privileged and had not been published, and, therefore, could not support the claims for defamation and tortious interference with business or employment relations.

1. Defamation Claims. A viable defamation claim under Georgia law consists of (1) a false and defamatory statement concerning the plaintiff; (2) an unprivileged communication to a third party; (3) fault by the defendant amounting at least to negligence; and (4) special harm or the "actionability of the statement irrespective of special harm." (Punctuation and footnote omitted.) Mathis v. Cannon, 276 Ga. 16, 20-21(2), 573 S.E.2d 376 (2002). See OCGA §§ 51-5-1(a), 51-5-4(a). Publication of the statement is imperative and, without it, the defamation claim fails. See OCGA § 51-5-1(b) ("The publication of the libelous matter is essential to recovery."); Kurtz v. Williams, 188 Ga. App. 14, 15(3), 371 S.E.2d 878 (1988) ("Publication is indispensable to recover for slander.") (Citation and punctuation omitted). Guided by these principles, we now separately address the distinct issues of privilege and publication.

(a) Privilege. Deloitte emphasizes, and we fully agree, that public policy demands the fostering of an environment where the exchange of information between an accountant and its audit client is unrestrained and freely transmitted without fear of disclosure. See Gearhart v. Etheridge, 232 Ga. 638, 639-640, 208 S.E.2d 460 (1974); Roberts v. Chaple, 187 Ga.App. 123, 124, 369 S.E.2d 482 (1988). Indeed, the Georgia Legislature created a statutory privilege in order to promote this unfettered exchange. OCGA § 43-3-32(b);² Crews v. Roger Wahl, C.P.A., P.C., 238 Ga. App. 892, 897(2), 520 S.E.2d 727 (1999). "Without an atmosphere of confidentiality[,] the client might withhold facts he considers unfavorable to this situation thus rendering the accountant powerless to adequately perform the services he renders." Gearhart, 232 Ga. at 640, 208 S.E.2d 460. See Roberts, 187 Ga.App. at 124, 369 S.E.2d 482.

This protection also extends to communications made from an accountant to its audit client while engaged in a professional relationship. See OCGA § 43-3-32(b). An accountant must be at liberty to express its concerns and to offer advice to its audit client in the discharge of its duties in order to diligently protect and promote its client's interests. See generally id.; Gearhart, 232 Ga. at 640, 208 S.E.2d 460; Roberts, 187 Ga.App. at 124, 369 S.E.2d 482.

Thus, the statements at issue here, made in the context of the auditing relationship, were privileged. But Georgia law recognizes two types of privilege—absolute and conditional. See generally OCGA §§ 51-5-7; 51-5-8; 51-5-9.

From motives of public policy[,] the law recognizes certain communications and publications as privileged either absolutely, entirely freeing the party from any liability to the person injured by the words or the publication, or conditionally, that is, the words shall be spoken in good faith, upon a proper occasion. When the privilege is absolute, the motive of the publication is immaterial. When the privilege is conditional[,] actual malice will bring about liability. With an absolute privilege the question of malice is not open; all inquiry into good faith is closed.

(Punctuation and footnotes omitted.) O'Neal v. Home Town Bank etc., 237 Ga.App. 325, 332(8), 514 S.E.2d 669 (1999). Thus, communications which are afforded an absolute privilege cannot form the basis of a defamation action, regardless of the falsity of the statements or the speaker's malicious intent; conditionally privileged statements, on the other hand, are actionable upon a showing of malice. See OCGA §§ 51-5-7; 51-5-8; 51-5-9.

Deloitte contends that public policy requires that the communications exchanged between an accountant and its audit client be absolutely privileged. We do not agree.

The doctrine of absolute privilege extends to "[a]ll charges, allegations, and averments contained in regular pleadings filed in a court of competent jurisdiction, which are pertinent and material to the relief sought." OCGA § 51-5-8. Although this privilege has not been strictly limited to "pleadings" as defined under OCGA § 9-11-7(a), it is restricted to "narrow and well-defined limits," which have been summarized as "statements made in official court documents and acts of legal process." (Citations, punctuation and footnotes omitted.) Simmons v. Futral, 262 Ga.App. 838, 839, 586 S.E.2d 732 (2003). See Davis v. Shavers, 269 Ga. 75, 76, 495 S.E.2d 23 (1998); Fedderwitz v. Lamb, 195 Ga. 691, 696, 25 S.E.2d 414 (1943); O'Neal, 237 Ga.App. at 332(8), 514 S.E.2d 669. Absolute privilege is based upon a public policy determination that the importance of one's ability to be free from restraint when engaged in legal processes outweighs a defamed party's right to seek legal redress.

The wisdom of so broad a privilege lies in the recognition that, without it, every complaint filed could generate a counterclaim for defamation. The privilege is intended for the promotion of the public welfare, the purpose being that members of the legislature, judges of courts, jurors, lawyers, and witnesses may speak their minds freely and exercise their respective functions without incurring the risk of a criminal prosecution or an action for the recovery of damages.

(Citation and punctuation omitted.) Stewart v. Walton, 254 Ga. 81, 82(2), 326 S.E.2d 738 (1985). See Fedderwitz, 195 Ga. at 696, 25 S.E.2d 414; Simmons, 262 Ga.App. at 839, 586 S.E.2d 732.

With this limited exception, Georgia law provides that "[i]n every case of privileged communications, if the privilege is used merely as a cloak for venting private malice and not bona fide in promotion of the object for which the privilege is granted, the party defamed shall have a right of action." OCGA § 51-5-9. "The cases speak of the privilege's forfeiture when one acts wilfully, corruptly or maliciously." (Citations and punctuation omitted.) Cohen v. Hartlage, 179 Ga.App. 847, 849, 348 S.E.2d 331 (1986).

Communications between an accountant and its audit client clearly cannot be characterized as being made in official court documents or within acts of legal process, and thus fall within the ambit of conditionally privileged communications. See OCGA § 51-5-9; Davis, 269 Ga. at 76, 495 S.E.2d 23 (declining to extend the absolute privilege to statements made in a recall application against a city official, holding instead...