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In Sobol v. New York State Association of REALTORS®, the New York Supreme Court addressed a libel claim resulting from a decision by the Ethics Hearing Panel of the New York State Association of REALTORS® (NYSAR). The court found that the plaintiff failed to present a prima facie case of libel, as the requirement of a "publication" was neither pleaded nor established. The court also held that the publishing of the decision, which contained a finding that the plaintiff performed the unauthorized practice of law, did not constitute libel, as the panel was protected by a qualified privilege.
In March 1994, the Ethics Hearing Panel of the Professional Standards Committee of the NYSAR held a hearing regarding a complaint lodged by Barton against Sobol. The Panel concluded that Sobol violated Article 17 of the NATIONAL ASSOCIATION OF REALTORS® (NAR) Code of Ethics, relating to unauthorized practice of law. After the panel members signed the decision, a copy was sent to the Barton, Sobol, and NYSAR legal counsel. A copy was also retained in NYSAR's file. While Sobol asserted that Reilly, a NYSAR employee, mailed copies of the decision to other individuals, there was no support for this allegation. The record indicated that the only persons who saw, received, or were privy to the decision consisted of: Barton, Sobol, the panel members, NYSAR legal counsel, and Reilly. Sobol sued NYSAR and several individual defendants for libel. The New York Supreme Court reviewed motions for summary judgment by Sobol and the defendants.
The New York Supreme Court stated "[a]n essential element in establishing a cause of action founded on libel is the requirement of publication. A libelous writing is published when it is read by a person other than the author and the one allegedly defamed." The court also stated that "an allegation that a person received and read an allegedly defamatory statement will be sufficient to state a cause of action in libel." However, the court noted that "[n]owhere in the record . . . are there any allegations, let alone proof, that the named Defendants both received and read the allegedly defamatory statement recorded in the decision . . . ." The court noted that "[m]ere receipt of the decision by the Defendants is simply not enough to establish publication sufficient to support [Sobol's] cause of action for libel." The court held that because Sobol had not established a necessary element of his claim, his motion for summary judgment was denied.
The New York Supreme Court also noted that even if Sobol succeeded in amending his pleading and establishing that the alleged libelous statement was published by the defendants, any publication of the decision would be protected by a qualified privilege. The court rejected NYSAR's contention that an absolute privilege applied to the decision, as it did not appear the hearing was a quasi-judicial proceeding. The court noted that "by participating and investigating the complaint . . . , the Defendants were pursuing their duty or 'common interest' in the review procedure afforded by the NYSAR. Accordingly, they are subject to a qualified privilege which, in the absence of any proof of malice, protects them from liability even if [Sobol] proves the communication to be false." The court found that Sobol did not submit sufficient proof that the panel's decision was motivated either by spite, ill-will, or made with knowledge of its falsity or with reckless disregard of whether it was true or not. Thus, the court found that Sobol's claim failed, and granted the defendants' motion for summary judgment dismissing Sobol's complaint.
Sobol v. New York State Association of REALTORS®, No. 139-95, RJI No. 15-1-95-0254 (N.Y. Sup. Ct. Jan. 2, 1996), aff’d 235 A.D.2d 966, 652 N.Y.S.2d 862 (1997).