Summary
The Appellate Division, First Department reversed the lower court's denial of defendants' motion to dismiss certain claims as time-barred and granted the motion to compel arbitration for the remaining claim. The court held that the plaintiff's defamation and tortious interference claims were barred by New York's one-year statute of limitations, rejecting arguments regarding alleged republication. Conversely, the court found that the breach of fiduciary duty claim arose from the termination of the plaintiff's shareholder agreement and was subject to mandatory arbitration under the parties' contract.
Topics
Practice areas
Questions Presented
- Whether the defamation and tortious interference claims are barred by the one‑year statute of limitations under CPLR 215[3]
- Whether the breach of fiduciary duty claim must be compelled to arbitration under the Shareholders Agreement
Holdings
- The defamation and tortious interference claims are time‑barred and must be dismissed.
- The breach of fiduciary duty claim is subject to arbitration and the action is stayed pending arbitration.
Key quotations
“Supreme Court erred in not dismissing plaintiff's time-barred defamation claims.”
“Supreme Court also erred in not dismissing plaintiff's cause of action for tortious interference with prospective employment against Sternfels.”
“Lastly, Supreme Court erred in denying defendants' motion to compel arbitration of plaintiff's cause of action for breach of fiduciary duty.”
Factual background
Arnab Ghatak, a former equity holder and senior partner at McKinsey, alleged that McKinsey and its managing partner made defamatory statements about him in 2021 and 2022 and that the firm breached its fiduciary duties under the Shareholders Agreement. He filed suit in 2024 asserting defamation, tortious interference with prospective employment, and breach of fiduciary duty claims.
Procedural history
The Supreme Court, New York County denied defendants' motion to dismiss the defamation and tortious interference claims as time‑barred and refused to compel arbitration of the breach of fiduciary duty claim. The Appellate Division, First Department reviewed the order and reversed the lower court's rulings.
Remand instructions
Stay the action pending arbitration of the breach of fiduciary duty claim.