Summary
This Appellate Division, First Department decision resolves a discovery dispute in a defamation lawsuit between Smartmatic USA Corp. and Fox Corporation. The court reversed a Supreme Court order that had vacated a lower tribunal's directive compelling plaintiffs to produce internal documents and customer communications regarding the business impact of federal criminal allegations against its executives. Applying New York's liberal discovery standard under CPLR 3101(a), the court held that the requested materials were reasonably calculated to lead to relevant evidence concerning special damages and lost profits. The opinion emphasizes that the threshold for pretrial discovery is broader than the standard for evidentiary admissibility at trial.
Topics
Practice areas
Questions Presented
- Whether the Supreme Court's vacatur of the May 28, 2024 discovery order was proper under CPLR 3101(a).
- Whether the documents sought by defendants are discoverable under New York's liberal discovery standard.
Holdings
- The Appellate Division held that the vacatur was improper and that the discovery order should be enforced; the documents sought are discoverable under CPLR 3101(a).
Key quotations
“Under New York's liberal discovery standard set forth in CPLR 3101(a), pretrial disclosure is warranted when the requesting party can show that the "discovery sought will result in the disclosure of relevant evidence or is reasonably calculated to lead to the discovery of information bearing on the [defense]" (SNI/SI Networks LLC v DIRECTV, LLC, 132 AD3d 616, 617 [1st Dept 2015] quoting Abrams v Pecile, 83 AD3d 527, 528 [1st Dept 2011]).” (at 1)
Factual background
Smartmatic USA Corp. sued Fox Corp. and related defendants alleging that false statements caused reputational harm and lost profits. The dispute centered on whether plaintiffs must disclose internal documents and communications concerning the impact of a federal indictment on Smartmatic's business, which defendants sought for use in their defense.
Procedural history
The Supreme Court, New York County, entered an order vacating a Judicial Hearing Officer's May 28, 2024 discovery order and later denied defendants' motion to renew opposition. The Appellate Division, First Department reviewed the vacatur and unanimously reversed the Supreme Court's decision, ordering plaintiffs to disclose the documents specified in the original May 28 order.
Remand instructions
Plaintiffs are directed to disclose the non‑privileged documents and communications regarding the effect of the DOJ allegations on Smartmatic's business, all internal documents concerning analysis of the indictment's impact, and all communications from any actual or potential customer about the indictment, as specified in the May 28, 2024 order.