Halloween: A Not-at-All Spooky Anniversary in Defamation Law

On October 31, 1955, the Supreme Court decided Rainier’s Dairies v. Raritan Valley Farms, Inc., 19 N.J. 552 (1955).  It was a 6-1 decision, with Justice Jacobs writing for the majority.  Justice Wachenfeld was the lone dissenter.

The case arose from proceedings before an administrative agency, the Office of Milk Industry.  Joseph and Michael Gonnella, trading as Golden Dawn Industry,  filed an application with that Office seeking to transfer its source of supply from Raritan Valley Farms to Rainier’s.  Raritan Valley Farms and another defendant filed verified petitions with the Director of Milk Industry that charged that Golden Dawn had “entered into an illegal agreement with Rainier to purchase milk from Rainier at two cents per quart below the minimum prices fixed by the Director.”

The Director then issued a complaint and order to show cause as to why the licenses of the Gonnellas and Rainier’s should not be revoked because of the alleged illegal agreement.  After a full hearing, with witnesses and cross-examination, the Director concluded that there were no sufficient grounds to revoke the licenses.  But he also determined that there was evidence that the Gonnellas had tried to obtain contracts from several dealers that would have entailed the purchase and sale of milk below the minimum price that the Director had established.  Accordingly, he denied the Gonnellas’ application to transfer their supply source from Raritan to Rainier’s.

Rainier’s then brought a lawsuit for libel and malicious interference with its business, based on the verified petitions that the defendants had filed before the Office of Milk Industry.  The Law Division granted summary judgment, holding that the verified petitions were absolutely privileged, since they were filed in a quasi-judicial forum.  The Appellate Division affirmed.

The case then reached the Supreme Court.  There, the main issues were whether the privilege was absolute or qualified, and whether the absolute privilege applicable to statements made in litigation should extend to the then somewhat newer context of administrative proceedings as well.

Justice Jacobs stated that “[a]lthough there is some diversity of opinion, most courts recognize that the persuasive social considerations underlying the grant of absolute privilege or immunity to participants in judicial proceedings are equally applicable to quasi-judicial proceedings of the nature presented in the instant matter; indeed there is much to be said for the view that their force is even greater where, as here, the proceeding was not merely designed to determine private issues between private parties but was primarily designed to ascertain whether important departmental regulations which were promulgated in the public interest were being violated.”  Rainier’s cited two cases for the idea that the privilege should be only a qualified one.  But the majority found those cases inapplicable, noting that in those cases, “there was no suggestion whatever that the proceedings were quasi-judicial in character.”

The Court said that where, as in Rainier’s, “the administrative proceeding was actually conducted in manner and with safeguards similar to a judicial proceeding and dealt with issues of significant public concern there would, under this or any other plausible view, be no basis for refusing to invoke the doctrine of absolute privilege or immunity to the same extent that it would be applicable in court proceedings.  Administrative agencies such as the Office of Milk Industry are now a vital part of American life and perform important public duties; it seems only just that, to the extent they discharge a function comparable to the judicial function, they and the participants in the proceedings before them be vested with a comparable privilege or immunity.”  That disposed of the libel claim.

The malicious interference claim failed as well.  Justice Jacobs observed that it would destroy the absolute privilege against defamation claims to “permit its circumvention by affording an almost equally unrestricted action under a different label.”

But all was not lost for Rainier’s.  The majority ruled that Rainier’s should have the opportunity to amend its pleadings to assert a claim of malicious prosecution.  Accordingly, the Court remanded for that purpose.

Justice Wachenfeld would have reversed for a different reason.  In his view, it was undesirable to extend the absolute privilege regarding defamation claims to a new forum– administrative agencies.  He would have held that the privilege before agencies was qualified, not absolute.

Sixty three years later, Rainier’s is still cited frequently as a leading case as to the absolute privilege for statements made in proceedings before courts or administrative agencies.  Justice Wachenfeld’s opinion that the absolute privilege was, so to speak, a “trick” and not a “treat” did not carry the day.