## Facts

- The case arose within multidistrict securities litigation concerning the collapse of American Continental Corporation and Lincoln Savings & Loan.
- Lexecon, Inc., an economic consulting firm, and Daniel R. Fischel, its employee, served as defense-side consultants and expert support in the underlying securities litigation.
- Class counsel included Milberg Weiss Bershad Hynes & Lerach and Cotchett, Illston & Pitre.
- Class counsel prepared a proposed Sixth Amended Complaint that, for the first time, named Lexecon and Fischel as defendants and alleged they knowingly assisted wrongful conduct.
- The proposed Sixth Amended Complaint was circulated to attorneys on the MDL service list but was not filed; a later filed complaint against Lexecon was substantially similar.
- A Milberg Weiss partner, Kevin P. Roddy, sent a letter to the *National Law Journal* criticizing Lexecon’s role in the litigation and characterizing its conduct in harsh terms.
- Lexecon and Fischel sued for defamation and related business torts based on (1) distribution of the unfiled draft complaint and (2) the Roddy letter; defendants asserted privileges and other defenses.
- Defendants moved for summary judgment on the remaining claims, and plaintiffs moved to dismiss defendants’ counterclaims.

## Issues

1. Whether distributing an unfiled draft amended complaint to counsel on the MDL service list could support defamation liability or was barred by the absolute litigation privilege.
2. Whether statements in a lawyer’s letter to a legal newspaper about an ongoing case were actionable defamation or nonactionable opinion/substantial truth.
3. Whether plaintiffs could pursue tortious interference and commercial disparagement based on the same communications if defamation failed or privilege applied.
4. Whether defendants’ counterclaims stated legally cognizable claims given litigation-related privileges and protections for opinion.

## Decision

- The court granted summary judgment for defendants on the remaining claims asserted by Lexecon and Fischel.
- The court held that distribution of the proposed Sixth Amended Complaint to the MDL service list was absolutely privileged as a communication preliminary to and related to the litigation.
- The court held the Roddy letter was not actionable defamation or commercial disparagement because it was litigation-related commentary and, in substance, opinion and/or substantially true characterization rather than provably false factual assertion.
- The court dismissed defendants’ counterclaims for failure to state a viable claim in light of the same privilege and opinion doctrines.

## Legal Principles

- Under Arizona law, an absolute litigation privilege protects attorneys’ communications made in judicial proceedings or preliminary to proposed proceedings, so long as they have some relation to the litigation; the privilege applies regardless of motive or alleged falsity.
- Draft pleadings circulated among counsel as part of contemplated amendment practice in complex litigation may fall within the absolute litigation privilege when limited to the litigation service list and related to the case.
- Defamation requires a provably false statement of fact; statements that are opinion, rhetorical hyperbole, or evaluative commentary about disclosed or publicly known litigation facts are generally not actionable.
- A plaintiff may not avoid the litigation privilege by recasting the same protected communication as tortious interference or commercial disparagement; derivative tort theories fail where the underlying conduct is privileged or nondefamatory.

## Conclusion

The court concluded that litigation-related communications—an unfiled draft complaint circulated within the case and a lawyer’s public commentary tied to ongoing litigation—were protected by absolute privilege and/or nonactionable opinion principles, defeating defamation and related business tort claims and requiring dismissal of counterclaims grounded in similarly protected statements.


In re Am. Cont'l Corp./Lincoln Sav. & Loan Sec. Litig., 884 F. Supp. 1388 (D. Ariz. 1995)