A Florida Franchise of Cold Stone Creamery was recently given a second bite at the apple when the Florida Court of Appeals found that his defamation case was improperly dismissed on the basis of absolute privilege. The dispute dates back to 2010 and involves a dispute between Cold Stone and its franchisee.
In 2010, the franchisee participated in a CNBC documentary giving a behind the scenes look at operating a franchise. Cold Stone, however, declined to participate in the documentary and, in response to the documentary airing on December 16, 2010, retained counsel to seek to have the documentary rescinded. On December 23, 2010, counsel for Cold Stone sent a letter to CNBC’s media counsel, and alleged that its franchisee had made false and defamatory remarks about Cold Stone throughout the documentary and demanded that CNBC stop broadcasting the documentary. Importantly, the December 23, 2010 letter never specifically threatened litigation.
The 2010 letter also contained comments aimed directly at the franchisee’s business and personal matters. Specifically, counsel for Cold Stone stated that, among other things, the franchisee “was not a good businessman or ethical;” misappropriated certain funds generated by his business for improper expenses; and violated his franchise agreement. Counsel for Cold Stone published the letter to an internet blog for franchisees several days later. This blog post stated that Cold Stone planned to file suit and was planning “a potential legal campaign to clarify its position and correct the inaccuracies presented in the CNBC piece.”
Based on the 2010 letter’s statements about the franchisee, he filed suit against Cold Stone, its counsel, and related operating entities alleging various defamation causes of action. Cold Stone filed a motion to dismiss arguing that the statements were absolutely privileged as they were made in the course of a judicial proceeding. The trial court granted Cold Stone’s motion on the grounds of absolute privilege.
The court of appeals reversed, finding that it did not appear on the face of the complaint that Cold Stone was entitled to absolute privilege. The court of appeals noted the longstanding history of defamatory statements made in course of judicial proceedings being absolutely privileged, as well as the existence of a section of the Florida Retraction Statute that requires a five day pre-suit notice and provides similar privileges. In this instance, however, neither the complaints nor the exhibits alleged that there was a judicial proceeding in existence at the time the 2010 letter was sent to CNBC or the blog. There was also no allegation that that the December 23, 2010 letter was sent pursuant to section 770.01 of the Florida Retraction Statute, whereas multiple letters sent from the franchisee in response were specifically designated as fulfilling the requirements of the Florida Retraction Statute. Ultimately, the Court regarded Cold Stone’s 2010 letter as a cease and desist letter.
This case represents at least one court taking a stricter approach to recognizing absolute privilege. Based on the substance of the letters and defendants’ stated intentions of seeking to redress wrongs, one could conceivably believe that litigation proceedings were imminent and a privilege could apply. One media outlet, the franchise blog, even report that litigation was forthcoming. This case also presents a good example of why potential litigates and their lawyers in general should make it known to opposing parties when they are contemplating and/or pursuing litigation over a dispute.