IN THE SUPREME COURT OF OHIO

JOHN J. REISTER, RECEIVER, on behalf of CERTIFIED STEEL STUD ASSOCIATION, INC.,

Plaintiff-Appellant,

v.

WILLIAM A. GARDNER and EDWARD R. SLISH,

Defendants-Appellees,

v.

CLARK WESTERN DIETRICH BUILDING SYSTEMS LLC dba CLARKDIETRICH,

Interested Party-Appellant,

v.

CERTIFIED STEEL STUD ASSOCIATION, INC.,

Intervenor-Plaintiff.

) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

Case No. 2019-1815

On Appeal from the Butler County Court of Appeals, Twelfth Appellate District Court of Appeals Case No. CA2019-01-0010

MERIT BRIEF OF AMICUS CURIAE OHIO CHAMBER OF COMMERCE IN SUPPORT OF APPELLEES

Lauren S. Kuley (0089764) Benjamin Beaton (0098525) SQUIRE PATTON BOGGS (US) LLP 201 E. 4th Street, Suite 1900 Cincinnati, Ohio 45202 Phone: (513) 361-1200 Facsimile: (513) 361-1201 benjamin.beaton@squirepb.com lauren.kuley@squirepb.com Kevin D. Shimp (0097660) Ohio Chamber of Commerce 34 S. Third St., Suite 100

James B. Helmer, Jr. (0002878) Robert M. Rice (0061803) Jennifer L. Lambert (0075762) B. Nathaniel Garrett (0090939) HELMER, MARTINS, RICE & POPHAM CO., L.P.A. 600 Vine Street, Suite 2704 Cincinnati, OH 45202 Phone: (513) 421-2400 Fax: (513) 421-7902 jhelmer@fcalawfirm.com rrice@fcalawfirm.com jlambert@fcalawfirm.com

Supreme Court of Ohio Clerk of Court - Filed June 17, 2020 - Case No. 2019-1815

Columbus, OH 43215 Phone: (614) 228-4201 KShimp@ohiochamber.com Counsel for Amicus Curiae Ohio Chamber of Commerce Daniel R. Warncke (0061799) Aaron M. Herzig (0079371) TAFT, STETTINIUS & HOLLISTER LLP 425 Walnut Street, Suite 1800 Cincinnati, OH 45202-3957 Phone: (513) 381-2838 warncke@taftlaw.com aherzig@taftlaw.com Jeffrey M. Pollock Robert J. Rohrberger Allison L. Hollows FOX ROTHSCHILD LLP 997 Lenox Drive Lawrenceville, NJ 08648-2311 Phone: (609) 896-3600 jmpollock@foxrothschild.com rrohrberger@foxrothschild.com ahollows@foxrothschild.com Counsel for Appellee William A. Gardner Peter J. Georgiton (0075109) Justin M. Burns (0093686) DINSMORE & SHOHL LLP 191 W. Nationwide Blvd., Ste. 300 Columbus, OH 43215-5134 Phone: (614) 628-6963 peter.georgiton@dismore.com justin.burns@dinsmore.com Scott M. Ratchick John C. Guin CHAMBERLAIN HRDLICKA 191 Peachtree Street, N.E., 46thfloor Atlanta, GA 30303 Phone: (404) 659-1410 scott.ratchick@chamberlainlaw.com john.guin@chamberlainlaw.com

ngarrett@fcalawfirm.com Counsel for Appellant Receiver John J. Reister Steven A. Tooman (0066988) Heather Sanderson Lewis (0069212) MILLIKIN & FITTON LAW FIRM 9032 Union Centre Blvd., Suite 200 West Chester, OH 45069 Phone: (513) 863-6700 tooman@mfitton.com lewis@mfitton.com Counsel for Appellant Receiver John J. Reister D. Jeffrey Ireland (0010443) Stephen A. Weigand (0083573) Jason W. Palmer (0088336) FARUKI IRELAND COX RHINEHART & DUSING PLL 201 East Fifth Street, Suite 1420 Cincinnati, OH 45202 Phone: (513) 632-0300 djireland@ficlaw.com sweigand@ficlaw.com jpalmer@ficlaw.com Counsel for Intervenor-Plaintiff Certified Steel Stud Association, Inc. Matthew Blickensderfer (0073019) Simon Y. Svirnovskiy (0097096) FROST BROWN TODD LLC 3300 Great American Tower 301 East Fourth Street Cincinnati, Ohio 45202 Phone: (513) 651-6162 mblickensderfer@fbtlaw.com ssvirnovskiy@fbtlaw.com Anthony Cillo Fridrikh V. Shrayber (0095330) COHEN & GRIGSBY, P.C. 625 Liberty Avenue

Counsel for Appellee Edward R. Slish

Pittsburgh, PA 15222-3152 Phone: (412) 297-4900 tcillo@cohenlaw.com fshrayber@cohenlaw.com Counsel for Appellant ClarkWestern Dietrich Building Systems LLC dba ClarkDietrich

TABLE OF CONTENTS Page

- i -

I. INTRODUCTION AND STATEMENT OF AMICUS INTEREST ................................ 1

II. STATEMENT OF THE CASE AND FACTS .................................................................. 3

III. ARGUMENT ..................................................................................................................... 4

Counter-Proposition Of Law No. 1: The litigation privilege protects litigants from civil liability for asserting their rights to present a case for jury determination. .................................................................................................................. 5

A. The litigation privilege promotes the integrity of the judicial process. ...................... 6

B. The litigation privilege protects participation in the legal process, not just defamatory statements.. .............................................................................................. 9

C. Appellants’ case seeks to impose liability for exercising the fundamental right of access to a jury determination. ..................................................................... 15

D. Appellants’ arguments for narrowing the privilege are unfounded. ......................... 18

Counter-Proposition Of Law No. 2: The business judgment rule does not displace the litigation privilege. .................................................................................... 23

IV. CONCLUSION ................................................................................................................ 25

CERTIFICATE OF SERVICE .................................................................................................... 26

- ii -

TABLE OF AUTHORITIES

Page(s)

Cases

AIG Ret. Servs. v. Barbizet, No. 974-N, 2006 Del. Ch. LEXIS 130 (Ch. July 11, 2006) ...............................................19, 20

Am. Chem. Soc. v. Leadscope, Inc., 133 Ohio St.3d 366, 2012-Ohio-4193......................................................................................21

Apple Ridge Condominium Assn., Inc. v. Rodgers 2014 N.J. Super. Unpub. LEXIS 174 (Jan. 29, 2014)........................................................14, 18

Arbino v. Johnson & Johnson, 116 Ohio St. 3d 468, 2007-Ohio-6948.........................................................................16, 17, 20

Blevins v. Hudson & Keyse, Inc., 395 F. Supp. 2d 662 (S.D. Ohio 2004) ....................................................................................12

In re Cedar Funding Inc., 419 B.R. 807 (B.A.P. 9th Cir. 2009)..........................................................................................7

Clark v. Druckman, 218 W. Va. 427 (2005) ......................................................................................................14, 17

Davis v. Bailynson, 268 So. 3d 762 (Fla. Dist. Ct. App. 2019) ...................................................................15, 18, 22

Debrincat v. Fischer, 217 So. 3d 68 (Fla. 2017)...................................................................................................15, 22

Delmonico v. Traynor, 116 So. 3d 1205 (Fla. 2013).....................................................................................................15

Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d 380 (Fla. 2007).........................................................................................................8

Eichenberger v. Graham, 10th Dist. Franklin No. 12AP-216, 2013-Ohio-1203 ..............................................................12

Elling v. Graves, 94 Ohio App.3d 382, 640 N.E.2d 1156 (6th Dist. 1994) .........................................................10

Erie Cty. Farmers’ Ins. Co. v. Crecelius, 122 Ohio St. 210, 171 N.E. 97 (1930) .....................................................................................22

- iii -

Gordon v. Eckert Seamans Cherin & Mellott, LLC, 2018 Conn. Super. LEXIS 288 (Conn. Super. Ct. Feb. 6, 2018) .............................................11

Graham v. U.S. Bank, Nat’l Ass ‘n, No. 3:15-cv-0990-AC, 2015 U.S. Dist. LEXIS 175158 (D.Or. Dec. 2, 2015) ...................................................................................................11

Grant & Eisenhofer, P.A. v. Brown, No. CV 175968 PSG, 2017 U.S. Dist. LEXIS 204184 (C.D.Cal. Dec. 6, 2017) ..............13, 14

Haller v. Borror, 10th Dist. Franklin Cty. No. 95APE01-16, 1995 Ohio App. LEXIS 3312 (Aug. 8, 1995) ..........................................................................................................................22

Hartman v. Asset Acceptance Corp., 467 F. Supp. 2d 769 (S.D. Ohio 2004) ..............................................................................11, 12

Hecht v. Levin, 66 Ohio St.3d 458 ......................................................................................................................9

Hershey v. Edelman, 187 Ohio App.3d 400, 2010-Ohio-1992, 932 N.E.2d 386 (10th Dist.) ...................................10

Hines v. Chandra, N.D. Ohio No. 1:06-cv-2233, 2009 U.S. Dist. LEXIS 139834 (N.D. Ohio Feb. 23, 2009) ......................................................................................................................12, 16, 21

Hines v. Langhenry, 462 Fed. Appx. 500 (6th Cir. 2011) ........................................................................................12

Hoffman v. Connecticut, No. 09-cv-79-B-H, 2009 U.S. Dist. LEXIS 92340 (D.Me. Aug. 7, 2009) ..............................11

Ironworkers Dist. Council v. Andreotti, Del.Ch. No. 9714-VCG, 2015 Del.Ch. LEXIS 135 (May 8, 2015) .........................................20

Jackson v. Bellsouth Telecomm., 372 F.3d 1250 (11th Cir. 2004) ....................................................................................... passim

Lambert v. Carneghi, 158 Cal. App. 4th 1120, 70 Cal. Rptr. 3d 626 (Cal. Ct. App. 2008) .........................................7

Levin, Middlebrooks, Mabie, Thomas, Mayes & Mitchell, P.A. v. United States Fire Ins. Co., 639 So.2d 606 (Fla. 1994)................................................................................................ passim

Lisboa v. Lisboa, 8th Dist. Cuyahoga No. 95673, 2011-Ohio-351 ......................................................................10

- iv -

Loigman v. Twp. Comm. of Middletown, 185 N.J. 566 (2006) .................................................................................................................11

M.J. DiCorpo, Inc. v. Sweeney, 69 Ohio St.3d 497 ..............................................................................................................10, 20

Mahoney & Hagberg v. Newgard, 712 N.W.2d 215 (Minn. Ct. App. 2006) ..................................................................................11

In re Massey Energy Co., 2011 Del. Ch. LEXIS 83 (Del. Ch. May 31, 2011) .................................................................23

McNair v. City & Cty. of San Francisco, 5 Ca1.App.5th 1154 ...................................................................................................................6

Miller v. Bargaheiser, 70 Ohio App. 3d 702, 591 N.E.2d 1339 (3d Dist.1990) ..........................................................23

Morrison v. Gugle, 142 Ohio App.3d 244, 755 N.E.2d 404 (10th Dist. 2001) .......................................................20

Moss v. Parr Waddoups Brown Gee & Loveless, 285 P.3d 1157 (Utah 2012) ................................................................................................14, 17

Nationstar Mortg., LLC v. Ritter, 10th Dist. Franklin Nos. 14AP-1000, 14AP-1002, 2015-Ohio-3900 ....................10, 12, 16, 21

Nozik v. Sanson, 104 Ohio App.3d 671, 662 N.E.2d 1134 (8th Dist. 1995) .......................................................13

O’Brien v. Stein, 47 Ohio App.3d 191, 547 N.E.2d 1213 (10th Dist. 1988) .......................................................16

Paige Capital Mgt., LLC v. Lerner Master Fund, LLC, 22 A.3d 710 (Del. Ch. 2011)....................................................................................................20

Peterson v. Ballard, 292 N.J.Super. 575 (App.Div. 1996) .......................................................................................11

Prakash v. Altadis U.S.A. Inc., N.D. Ohio No. 5:10-cv-0033, 2012 U.S. Dist. LEXIS 46337 (Mar. 30, 2012) .......................10

Provident Bank v. Fish, 1st Dist. Hamilton Nos. C-830537, C-830552, 1984 Ohio App. LEXIS 9759 (May 16, 1984).......................................................................................................12, 13, 16, 21

Raulerson v. Font, 277 So. 3d 1057 (Fla. App. 2018) ............................................................................................21

- v -

Reister v. Gardner, 2019-Ohio-4720 (S.Powell, J., dissenting) ........................................................................12, 17

Rusheen v. Cohen, 37 Cal. 4th 1048 (2006) .........................................................................................................7, 8

Scarpelli v. McDermott Will & Emery LLP, 2018 IL App (1st) 170874, 426 Ill. Dec. 821, 117 N.E.3d 238 (Ill. App. 2018) ...............13, 17

Silberg v. Anderson, 50 Cal. 3d 205, 266 Cal. Rptr. 638, 786 P.2d 365 (1990) ...................................................7, 24

Sun Life Assurance Co. of Can. v. Imperial Premium Fin., LLC, 904 F.3d 1197 (11th Cir. 2018) ..............................................................................................15

Surace v. Wuliger, 25 Ohio St.3d 229 (1986)................................................................................................. passim

Theisler v. DiDomenico, 140 Ohio App.3d 379, 747 N.E.2d 859 (7th Dist. 2000) .........................................................10

Willitzer v. McCloud, 6 Ohio St.3d 447, 453 N.E.2d 693 (1983) ....................................................................... passim

Other Authorities

Hayden, Reconsidering the Litigators Absolute Privilege to Defame, 54 OHIO

ST.L.J. 985, 998 (1993) ............................................................................................................11

- 1 -

I. INTRODUCTION AND STATEMENT OF AMICUS INTEREST

The litigation privilege is essential to Ohio’s well-functioning judicial system and

receptive business climate. Legal and commercial interests alike benefit from the confidence that

they may vindicate their rights in court—subject to a judge’s rulings and supervision, but without

fear of Monday-morning quarterbacking in the guise of follow-on litigation. The privilege

enables citizens and companies to vigorously present their claims, defenses, and testimony

without triggering Appellants’ novel species of never-ending malpractice litigation: the

subsequent “should’ve-settled” cause of action.

The Appellants focus their attention on extreme or borderline cases (assault in the

courtroom, bribery of court officials, and so forth) that have little to do with the allegations here.

And for good reason: assigning liability based on the mere exercise of legal rights in court would

strike at the very heart of the litigation privilege and Ohio’s constitutional right to access the

courts. This lawsuit targets two board members’ assertion of their right to pursue a jury decision

rather than accept an incomplete out-of-court settlement. The lower courts applied the privilege

to a fundamental determination made by businesses, leaders, and citizens every day in every

lawsuit all across Ohio: whether to settle a dispute privately or present it to the court for public

determination.

Appellants now ask this Court to assign liability for that determination in a manner that

apparently no other court has ever countenanced: follow-on litigation against directors for an

organization’s assertion of its jury rights in the face of an incomplete settlement offer. They

would restrict the litigation privilege to cover only defamation claims based on overt statements

by the parties named in prior litigation—a stilted and technical view that courts in Ohio and other

jurisdictions properly rejected long ago.

- 2 -

The consequences of Appellants’ cramped view of the privilege are easy to foresee and

weighty: impossible hindsight judgments, impingement on the attorney-client privilege,

enhanced strike-suit incentives, and diminished investment and board-service incentives, to name

but a few. To avoid this morass, this Court should follow the lower courts’ lead by recognizing

that the privilege protects the core decision whether to litigate a claim to judgment. Facing the

hazards and costs of an adverse ruling make litigation scary enough for Ohioans as things stand;

little good would come from forcing unsuccessful litigants to defend their exercise of rights a

second time.

These costs would fall disproportionately on Ohio organizations and enterprises that

already face pressure to forego their fundamental right to a trial in Ohio civil cases. This would

impose significant costs and risks on Ohio businesses: deterring vigorous prosecution or defense

of claims, stunting the development of the law, dissuading qualified persons from serving as

directors and officers, and increasing the costs of insurance and indemnification. The possibility

of such a chill for legal rights raises serious concerns for the Ohio Chamber of Commerce and its

members, which must decide every day whether to assert and defend their rights in litigated

disputes across the state.

The core civil-justice interests implicated here are consistent with the Ohio Chamber’s

mission since its founding in 1893: As the state’s leading business advocate and resource, the

Ohio Chamber of Commerce aggressively champions the rule of law, free enterprise, economic

competitiveness and growth for the benefit of all Ohioans. The Chamber is Ohio’s oldest, largest,

and most diverse business association. Its 8,000-plus members range from small, family-owned

businesses to international corporations and represent all major industry sectors—including

manufacturing, retail, healthcare, transportation, and many others.

- 3 -

The Chamber advocates for those members’ interests on important statewide issues such

as these. Through its member-driven standing committees and the Ohio Small Business Council,

the Chamber formulates policy positions on a diverse array of issues critical to Ohio’s long-term

growth and success. The Chamber promotes its pro-growth agenda with policymakers across

Ohio and also in the courts by filing amicus curiae briefs in cases like this one.

In all of these efforts, the Chamber advocates for a stable and predictable court system,

free enterprise and a favorable investment climate in which enterprises flourish, create jobs, and

help Ohioans prosper. The appellate court’s decision in this case further those goals by

protecting the core of the litigation privilege and dismissing the second-guessing disguised as a

lawsuit in the case below. For the benefit of Ohio courts, litigants, and business leaders alike, the

decisions below should, respectfully, be affirmed.

II. STATEMENT OF THE CASE AND FACTS

The Chamber adopts the statement of the case and facts in Appellees’ memoranda. Two

aspects of this long-running dispute are central to this Court’s decision and the Chamber’s

interest in this case.

First, the picture painted by the Appellants that the directors chose to litigate rather than

walk away with a complete settlement is incomplete at best. The settlement offer made by

ClarkWestern Dietrich Building Systems LLC (ClarkDietrich), and its associated motion to

dismiss, would have ended only one of the two lawsuits between the parties. The relief available

to Defendants’ organization was incomplete, leaving open the possibility of further litigation in

the other pending case as well as future claims relating to the issue that would have been left

unresolved by the proposed settlement—whether ClarkDietrich products comply with the

International Building Code.

- 4 -

Second, Appellants’ claims challenge a decision to exercise legal rights that lies at the

core of virtually every lawsuit—whether to settle claims or present them to the factfinder. After

nearly eleven weeks of trial, right before closing arguments, ClarkDietrich offered to dismiss its

claims against CSSA in one of the two pending cases. CSSA opposed ClarkDietrich’s motion to

dismiss. CSSA’s counsel explained to the trial court that ClarkDietrich’s maneuver would

resolve only one of the two cases, and leave unresolved the parties’ broader dispute:

MR. HUST: This isn’t the end of the litigation for CSSA either. As the Court knows, the antitrust case could be appealed and sent back. These issues that we’ve dealt with in this case related to CSSA and disparagement would be issues that would be -- if there was a second trial in the antitrust, would be revisited again in retched detail, all of the evidence we’ve sat here for six or eight months.

…

THE COURT: So the reasonable and prudent direction of the CSSA is to oppose the motion to dismiss?

MR. HUST: Because this is the chance to end it on this issue. Otherwise, we’re going to go through him -- possibly go through the same exercise if the antitrust case would be somehow reversed on appeal and back. We’ve invested two months, lots of witnesses. We’re right here with, you know, closing argument coming up next. And the organization wants a decision.

THE COURT: Fair enough.

(Nov. 16 Trial Trans., 8405:3–8407:9) (emphasis added).) In light of CSSA’s position, the trial

court denied ClarkDietrich’s motion to dismiss.

Appellants now seek to hold CSSA’s directors personally liable for CSSA’s assertion of

its legal right to a jury determination. Appellants argue that the directors breached their fiduciary

duties when CSSA opposed ClarkDietrich’s motion to dismiss and rejected the partial settlement

offer in favor of exercising its constitutional right to a jury determination.

- 5 -

III. ARGUMENT

The decision to litigate or surrender legal rights lies at the core of virtually all civil

litigation. It carries particular significance for the Chamber’s members and Ohio’s economic

competitiveness: Organizations engaged in litigation must continually assess and re-assess their

claims and defenses in light of their likelihood of success and the cost of further litigation. In

addition, they must consider the broader context of the dispute, including the impact of a

settlement on other pending lawsuits and the potential for further claims arising out of the same

course of conduct. As discussed below, the litigation privilege exists to ensure that the

courtroom—given its already high stakes—remains a protected space where litigants may assert

their rights for a judicial determination, without fear of follow-on litigation based on the

statements and conduct during the initial case.

Counter-Proposition of Law No. 1: The litigation privilege protects litigants from civil liability for asserting their rights to present a case for jury determination.

The litigation privilege exists to “protec[t] the integrity of the judicial process.” Willitzer

v. McCloud, 6 Ohio St.3d 447, 449, 453 N.E.2d 693, 695 (1983). Ohio courts have applied the

privilege in a principled manner to ensure it fulfils that bedrock role of shielding in-court

assertions of legal rights from follow-on lawsuits. Courts have therefore applied the privilege to

protect core litigation activity regardless of the many creative theories and labels given a

subsequent suit. Appellants argue for an antiquated “narrow construction” of the privilege that

would undermine this basic purpose, undo decades of Ohio authority, and place Ohio out of step

with the modern approach to the litigation privilege. The claims in this case—which challenge

protected litigation activity concerning the decision to submit claims to a jury rather than settle—

fall well within the scope of the privilege.

- 6 -

A. The litigation privilege promotes the integrity of the judicial process.

The litigation privilege serves the interests of courts and parties alike, ensuring each may

focus on the case at hand rather than looking over their shoulders at the prospect of the next

lawsuit. “The most basic goal of our judicial system is to afford litigants the opportunity to freely

and fully discuss all the various aspects of a case in order to assist the court in determining the

truth, so that the decision it renders is both fair and just.” Surace v. Wuliger, 25 Ohio St.3d 229,

235 (1986). The litigation privilege is crucial to achieving that goal: “independence in decision-

making is essential to preserving the integrity of the judicial process,” and parties must be able to

pursue their claims and defenses “without fear of consequences” beyond those inherent to the

case at hand. Willitzer, 6 Ohio St.3d at 449.

In particular, the privilege preserves the integrity of the judicial process by “prevent[ing]

endless lawsuits.” Surace, 25 Ohio St.3d at 234. “[P]articipants in litigation must … be free to

use their best judgment in prosecuting or defending a lawsuit without fear of having to defend

their actions in a subsequent civil action for misconduct.” Jackson v. Bellsouth Telecomm., 372

F.3d 1250, 1274 (11th Cir. 2004) (quoting Levin, Middlebrooks, Mabie, Thomas, Mayes &

Mitchell, P.A. v. United States Fire Ins. Co., 639 So.2d 606, 608 (Fla. 1994)); see also McNair v.

City & Cty. of San Francisco, 5 Ca1.App.5th 1154, 1162–63 (2016) (“The purpose of the

litigation privilege is to afford litigants and witnesses freedom of access to the courts without the

fear of harassment by subsequent derivative tort actions.”).

This specter of potential derivative litigation stands in the way of achieving a “fair and

just” outcome. If litigants fear liability over their assertion of legal positions in court, that will

stunt the ordinary development and application of our common law system, deprive the

factfinder of evidence, and “thwart the truth-seeking process.” Surace, 25 Ohio St.3d at 231. If

parties and their attorneys fear being sued for how they prosecute or defend a lawsuit, that would

- 7 -

“unduly stifle attorneys from zealously advancing the interests of their clients.” Id. at 235. And if

claims could be based on second-guessing how a party prosecuted or defended a prior lawsuit,

that would “clog court dockets with a multitude of lawsuits,” id., and undermine the “finality of

judgments.” See Rusheen v. Cohen, 37 Cal. 4th 1048, 1063 (2006).

These corrosive effects of potential follow-on litigation are incompatible with the goal of

achieving a “fair and just” outcome. By extinguishing the potential for follow-on litigation, the

litigation privilege protects the integrity of the judicial system:

Given the importance to our justice system of ensuring free access to the courts, promoting complete and truthful testimony, encouraging zealous advocacy, giving finality to judgments, and avoiding unending litigation, it is not surprising that … the litigation privileg[e] has been referred to as “the backbone to an effective and smoothly operating judicial system.”

Silberg v. Anderson, 50 Cal. 3d 205, 214–15, 266 Cal. Rptr. 638, 643–44, 786 P.2d 365, 370

(1990); see Nilsen v. Neilson (In re Cedar Funding Inc.), 419 B.R. 807, 824 (B.A.P. 9th Cir.

2009) (“[C]ourts rely on the privilege to prevent the proliferation of lawsuits after the first one is

resolved.”) (quoting Lambert v. Carneghi, 158 Cal. App. 4th 1120, 1138, 70 Cal. Rptr. 3d 626

(Cal. Ct. App. 2008)).

Preventing this sort of litigation echo is particularly important to the business community.

Comprehensive resolution of disputes would be made impossible by the ever-present threat of

collateral litigation. Organizations and their directors would face discovery exposing reasoning

and strategy in prior litigation. Businesses would have to weigh the exercise of their legal rights

against the risk that their litigation decision-making would be exposed to the public glare.

This Court, furthermore, has recognized that “the result [of the privilege] may be harsh in

some instances and a party to a lawsuit may possibly be harmed without legal recourse.” Surace,

25 Ohio St.3d at 234. However, all privileges “res[t] upon the same idea, that conduct which

otherwise would be actionable is to escape liability because the defendant is acting in furtherance

- 8 -

of some interest of social importance ….” Id. at 231 (citing Prosser, Law of Torts, Section 114

(4th ed. 1971)). The purpose of the litigation privilege—“protecting the integrity of the judicial

process,” Willitzer, 6 Ohio St.3d at 449—carries such weight that, “on balance, a liberal rule of

absolute immunity is the better policy.” Surace, 25 Ohio St.3d at 234.

That does not mean that parties may litigate with impunity. The decisions of

organizations and executives alike are plainly disciplined by the liability and sanctions that could

be imposed in the initial litigation. Appellants’ position necessarily contends that the tools and

risks available in court are insufficient to discipline decisionmaking—as if the $43 million

verdict here is not enough to make boards, companies, and executives think twice before

rejecting a settlement offer.

Apart from liability judgments, moreover, “[s]ufficient protection from gross abuse of the

privilege is provided by the fact that an objective judge conducts the judicial proceedings.” Id.

The court may exercise its contempt authority to discipline the exercise of legal rights in that

proceeding (as opposed to a third party’s separate and subsequent lawsuit before a different

judge). Id.; see also Echevarria, McCalla, Raymer, Barrett & Frappier v. Cole, 950 So. 2d 380,

384 (Fla. 2007) (“[A]dequate remedies still exist for misconduct in a judicial proceeding, most

notably the trial court’s contempt power, as well as the disciplinary measures of the state court

system and bar association.”). Particularly if a party—such as ClarkDeitrich in these

proceedings—believes another party, witness, or attorney is acting improperly, it must raise the

issue with the judge overseeing the case. See, e.g., Rusheen, 37 Cal. 4th at 1063 (“[M]odern

public policy seeks to encourage free access to the courts and finality of judgments by limiting

derivative tort claims arising out of litigation-related misconduct and by favoring sanctions

- 9 -

within the original lawsuit.”). It cannot wait until the case is over and then pursue follow-on

litigation—which is precisely what ClarkDeitrich is doing in this proceeding.

B. The litigation privilege protects participation in the legal process, not just defamatory statements.

Because the litigation privilege is a fundamental protection for the right to access courts

and vindicate legal rights, courts in Ohio and elsewhere have taken a common-sense approach to

its application. Appellants contend the litigation privilege is limited to the defamation cause of

action and to statements alone, not conduct. Ohio courts, however, do not arbitrarily cabin the

privilege to defamatory statements. Both limitations are at odds with the law in Ohio and most

other jurisdictions. As to the cause of action, Ohio has applied the privilege to reject a wide

range of civil claims. As to the underlying conduct, Ohio has not limited the privilege to

testimony or statements alone, but like other states recognizes its application to participation in

the legal process. In short, the litigation privilege is not the outmoded doctrinal straitjacket

Appellants describe, good for only one type of claim and easily pled around. To the contrary, it

forecloses civil liability for the presentation of legal rights and evidence in the course of a

judicial proceeding.

***

Appellants’ position limiting the litigation privilege to defamation only is unmoored from

Ohio law and the majority of jurisdictions. All of the parties agree that the privilege protects

statements that bear a “reasonable relation” to a judicial proceeding. See Hecht v. Levin, 66 Ohio

St.3d 458, at syllabus ¶ 2 (1993); Surace, 25 Ohio St.3d 229, at syllabus; see also ClarkDietrich

Br. at 6 (acknowledging the same); Receiver Br. at 34 (same). Notably, this Court joined the

majority of jurisdictions in adopting the “reasonable relation” standard to broaden the privilege.

Surace, 25 Ohio St.3d at 232–33. The Court rejected a rule restricting the privilege to statements

- 10 -

“legally relevant” to the proceedings. Id. It held that this narrow standard was “not as

comprehensive … in insuring that any and all matters germane to a particular lawsuit will be

expressed to aid courts in their quest to seek the truth.” Id. The “reasonable relation” rule, in

contrast, provided more “comprehensive” protection for the judicial process. Id.

While the particular claim at issue in Surace was defamation, the Court did not restrict

the privilege to defamation claims. To the contrary, it has recognized that the rule in Surace bars

all forms of “civil liability.” M.J. DiCorpo, Inc. v. Sweeney, 69 Ohio St.3d 497, 501 and syllabus

(1994) (barring claims for negligent or intentional infliction of emotional distress and invasion of

privacy). Other Ohio courts have also applied the privilege to bar a multitude of tort and

statutory claims. See, e.g., Nationstar Mortg., LLC v. Ritter, 10th Dist. Franklin Nos. 14AP-

1000, 14AP-1002, 2015-Ohio-3900, ¶ 15 (fraud, slander, and intentional infliction of emotional

distress); Lisboa v. Lisboa, 8th Dist. Cuyahoga No. 95673, 2011-Ohio-351, ¶¶ 21–24 (breach of

contract, third-party malpractice, fraud, conspiracy, civil aiding and abetting, and intentional

inflection of emotional distress); Hershey v. Edelman, 187 Ohio App.3d 400, 2010-Ohio-1992,

932 N.E.2d 386, ¶ 32 (10th Dist.) (falsification); Elling v. Graves, 94 Ohio App.3d 382, 387, 640

N.E.2d 1156 (6th Dist. 1994) (bad faith, fraud, undue influence, misdiagnosis); Prakash v.

Altadis U.S.A. Inc., N.D. Ohio No. 5:10-cv-0033, 2012 U.S. Dist. LEXIS 46337, at *30 (Mar. 30,

2012) (applying Ohio law) (unfair competition, deceptive trade practices, and interference with

prospective economic advantage); Theisler v. DiDomenico, 140 Ohio App.3d 379, 384, 747

N.E.2d 859 (7th Dist. 2000) (fraud, intentional misrepresentation, and concealment).

To reverse course and arbitrarily limit the privilege to defamation claims only would

allow litigants to undermine critical policies through creative pleading. Such a rigid construction

of the privilege ignores that, “[t]he public policy reasons for applying judicial immunity to

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defamatory communications also apply with equal force to other torts that arise from a person’s

participation in the judicial process.” Mahoney & Hagberg v. Newgard, 712 N.W.2d 215, 220

(Minn. Ct. App. 2006). As reflected by the flexible treatment of the privilege by Ohio courts,

“[t]he purpose of such an expansion is to prevent plaintiffs from subverting the purposes of the

defamation privilege by bringing actions on other legal theories.” Hayden, Reconsidering the

Litigators Absolute Privilege to Defame, 54 OHIO ST.L.J. 985, 998 (1993).

Ohio’s recognition that the privilege extends beyond merely defamation claims is also

consistent with the majority rule. “[C]ourts in other jurisdictions have expanded the litigation

privilege to torts other than defamation and … have followed an approach that has strengthened

the litigation privilege, not abrogated it.” Gordon v. Eckert Seamans Cherin & Mellott, LLC,

2018 Conn. Super. LEXIS 288, at *30 (Conn. Super. Ct. Feb. 6, 2018) (emphasis added, cleaned

up); see also Hartman v. Asset Acceptance Corp., 467 F. Supp. 2d 769, 777 (S.D. Ohio 2004)

(noting the “modern version” of the litigation privilege has broadened “in most states to include

all kinds of tort liability”).1 Appellants’ antiquated restriction of the privilege to defamation

claims turns a blind eye to why this Court and others abandoned that limitation decades ago.

Appellants’ other primary argument is that the privilege is limited to “statements” and not

conduct. But it is also incompatible with Ohio law and policy to mechanically restrict the

privilege to claims based on statements only. Ohio courts have recognized that the privilege

protects litigation activity beyond mere “statements.” See, e.g., Hartman , 467 F. Supp. 2d at 776

(Ohio litigation privilege protects “all actors in the course of judicial proceedings from

1 See also Levin v. U.S. Fire Ins. Co., 639 So.2d 606, 607–08 (Fla. 1994) (Florida’s privilege barred tortious

interference claim); Loigman v. Twp. Comm. of Middletown, 185 N.J. 566, 583 (2006) (privilege provides protection “not only from defamation actions, but also from a host of other tort-related claims”); Peterson v. Ballard, 292 N.J.Super. 575, 588–89 (App.Div. 1996) (barring statutory discrimination claim); Graham v. U.S. Bank, Nat’l Ass ‘n, No. 3:15-cv-0990-AC, 2015 U.S. Dist. LEXIS 175158, *46–47 (D.Or. Dec. 2, 2015) (“While litigation privilege originated as a bar to defamation claims, Oregon courts explicitly extended the privilege to all tort actions.”); Hoffman v. Connecticut, No. 09-cv-79-B-H, 2009 U.S. Dist. LEXIS 92340, at *48 (D.Me. Aug. 7, 2009) (“The privilege has origins in the law of libel and slander, but it has been expanded to other torts.”).

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subsequent liability for acts and conduct related to the proceeding.”) (emphasis added); Blevins

v. Hudson & Keyse, Inc., 395 F. Supp. 2d 662, 666 (S.D. Ohio 2004) (same). Even the dissenting

Judge below acknowledged “the litigation privilege should apply to both ‘statements’ and

‘actions’ made in judicial and quasi-judicial proceedings.” Reister v. Gardner, 2019-Ohio-4720,

¶ 39 (S.Powell, J., dissenting).

Ohio courts have thus applied the privilege to bar claims based on conduct other than

overt “statements.” For example, several cases have found that the privilege bars claims based on

the filing of a lawsuit. See, e.g., Provident Bank v. Fish, 1st Dist. Hamilton Nos. C-830537, C-

830552, 1984 Ohio App. LEXIS 9759, at *7 (May 16, 1984) (privilege barred claims for

malicious prosecution and invasion of privacy based on bank bringing an action to recover

allegedly overdrawn amounts); Nationstar Mortg., LLC v. Ritter, 10th Dist. Franklin Nos. 14AP-

1000 & 14AP-1002, 2015-Ohio-3900, ¶ 15 (“To the extent that the counterclaims for fraud,

slander, and intentional infliction of emotional distress are based on Nationstar’s filing and

refiling of its foreclosure complaints, these claims are clearly barred by the doctrine of absolute

privilege.”) (emphasis added); Hines v. Chandra, N.D. Ohio No. 1:06-cv-2233, 2009 U.S. Dist.

LEXIS 139834, *38–39 (N.D. Ohio Feb. 23, 2009), aff’d sub nom. Hines v. Langhenry, 462 Fed.

Appx. 500 (6th Cir. 2011) (Ohio privilege barred claim for intentional infliction of emotional

distress even if it was “not based on the charges in the grievance, but the act of filing the

grievance”); see also Eichenberger v. Graham, 10th Dist. Franklin No. 12AP-216, 2013-Ohio-

1203, ¶ 21 (“A disciplinary grievance is a judicial proceeding, and statements made in the course

thereof, as well as the filing of the complaint itself, enjoy an absolute privilege against civil

action.”) (emphasis added); Nozik v. Sanson, 104 Ohio App.3d 671, 671–72, 662 N.E.2d 1134

(8th Dist. 1995) (“[W]e hold that an absolute privilege prevents a cause of action for slander of

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title for filing a judgment lien.”) (emphasis added). As the court explained in Provident Bank,

claims cannot be based on filing a lawsuit because in doing so a plaintiff is “clearly exercising a

right given it by law, [i]s privileged to do so, and absolutely privileged as to the course of

judicial proceedings thereunder.” 1984 Ohio App. LEXIS 9759, at *7–8.

Indeed, this Court has recognized that litigation conduct other than “statements” may fall

within the privilege. In Willitzer, this Court considered whether the privilege barred a negligence

claim based on a doctor’s alleged failure to properly conduct a medical examination. 6 Ohio

St.3d at 449. The Court adopted a “functional analysis” under which “activities” are privileged if

they are “intimately associated” with a judicial or quasi-judicial process. Id. The medical

examination in question was not privileged because it was “an investigative-medical fact-finding

function -- not a quasi-judicial function.” Id. That “functional analysis” would have been

unnecessary if, as Appellants claim, the privilege only applies to “statements.”

Ohio’s approach on this issue again reflects the modern majority view, which rejects the

distinction between “statements” and other litigation conduct. See, e.g., Levin, 639 So. 2d at 608

(“[A]bsolute immunity must be afforded to any act occurring during the course of a judicial

proceeding, regardless of whether the act involves a defamatory statement or other tortious

behavior such as the alleged misconduct at issue, so long as the act has some relation to the

proceeding”); Jackson, 372 F.3d at 1275 (same); Grant & Eisenhofer, P.A. v. Brown, No. CV

175968 PSG (PJWx), 2017 U.S. Dist. LEXIS 204184, *16–17 (C.D.Cal. Dec. 6, 2017) (privilege

is not limited to claims “based on communications” and encompasses “necessarily related

noncommunicative acts”); Scarpelli v. McDermott Will & Emery LLP, 2018 IL App (1st)

170874, ¶ 25, 426 Ill. Dec. 821, 117 N.E.3d 238 (Ill. App. 2018) (privilege “extended beyond

communications to include conduct performed within the practice of law); Clark v. Druckman,

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218 W. Va. 427, 433 (2005) (“[W]e see no reason to distinguish between communications made

during the litigation process and conduct occurring during the litigation process.”) (emphasis in

original); Moss v. Parr Waddoups Brown Gee & Loveless, 285 P.3d 1157, 1165–66 (Utah 2012)

(privilege is not limited to “statements occurring in the course of judicial proceedings” and

“extend[s] to an attorney’s conduct occurring in the course of judicial proceedings”).

As other courts recognize, allowing follow-on litigation that second-guesses the assertion

of legal rights in prior litigation would jeopardize the critical role of the privilege in protecting

the judicial process. For example, in Apple Ridge, the privilege barred a breach of fiduciary duty

claim alleging that the defendant “acted in bad faith during the [prior] litigation by failing to

conduct discovery in an effort to resolve the matter promptly, and … by opposing [the

plaintiff’s] motion to intervene.” Apple Ridge Condominium Assn., Inc. v. Rodgers, 2014 N.J.

Super. Unpub. LEXIS 174, at *5 (Jan. 29, 2014). The court recognized that, despite the

allegation of bad faith, “the association and its attorney must have the ability to make decisions

regarding disputes and litigation without second-guessing by one or more individual unit

owners.” Id. at *8.

Similarly, in Jackson, the privilege barred tort claims that “rest on allegations that the

defendants improperly extracted an unfairly low settlement from the plaintiffs, and negotiated

settlement terms that allowed plaintiffs’ counsel to take too high a percentage of the settlement

funds.” 372 F.3d at 1275. That court recognized that where “the conduct in question is inherently

related to, and occurs during an ongoing judicial proceeding, under Florida law, [it] must be

protected so that participants in a lawsuit are unhindered in exercising their judgement as to the

best way to prosecute or defend the lawsuit.” Id. at 1277.

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Finally, in Levin, the privilege barred a tort claim alleging that a party “fail[ed] to

subpoena and call counsel as a witness at trial” despite certifying to the trial court that it would

do so. 639 So. 2d at 607. The court explained that it was essential to apply the privilege to

litigation decisions such as whether or not to call a witness:

The rationale behind the immunity afforded to defamatory statements is equally applicable to other misconduct occurring during the course of a judicial proceeding. Just as participants in litigation must be free to engage in unhindered communication, so too must those participants be free to use their best judgment in prosecuting or defending a lawsuit without fear of having to defend their actions in a subsequent civil action for misconduct.

Id. at 608 (emphasis added).2

Consistent with these decisions and the Ohio law described above, this Court should

refrain from subjugating the important policies underlying the litigation privilege to Appellants’

arbitrary and mechanical labels.

C. Appellants’ case seeks to impose liability for exercising the fundamental right of access to a jury determination.

The case below second-guesses the decision to litigate rather than settle a hard-fought

lawsuit. What Appellants target, however, falls well within the bounds of the privilege as

recognized by this Court and others across the country. The decision whether to litigate claims to

a jury or resolve them out of court lies at the heart of the right the privilege exists to protect—

access to a just and fair judicial system. Section 5, Article 1 of the Ohio Constitution protects the

2 Contrary to Appellants’ suggestion, Florida courts continue to apply Levin in circumstances analogous to the

claims here. For example, in Davis v. Bailynson, 268 So. 3d 762 (Fla. Dist. Ct. App. 2019), the court cited Levin and held that the privilege barred a breach of fiduciary duty claim based on conduct during prior litigation—specifically, the refusal to agree to modify an injunction. Id. at 769–70. The conduct was so obviously privileged that the court sanctioned the plaintiff’s attorney for frivolous conduct. Id. at 770.

The decisions Appellants invoke for a narrow interpretation of Levin involve different limits on the privilege not applicable here. See, e.g., Delmonico v. Traynor, 116 So. 3d 1205, 1218 (Fla. 2013) (statements “during ex-parte, out-of-court questioning of a potential, nonparty witness” were protected by a qualified privilege); Debrincat v. Fischer, 217 So. 3d 68, 71 (Fla. 2017) (“[T]he litigation privilege does not bar the filing of a claim for malicious prosecution that was based on adding a party defendant to a civil suit.”); Sun Life Assurance Co. of Can. v. Imperial Premium Fin., LLC, 904 F.3d 1197, 1219 (11th Cir. 2018) (privilege did not cover “the filing of a lawsuit where that specific act breaches a contract”). (See Receiver Br. at 30–31; ClarkDietrich Br. at 14–15.)

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fundamental right to vindicate legal rights in open courts. Arbino v. Johnson & Johnson, 116

Ohio St. 3d 468, 880 N.E.2d 420, 2007-Ohio-6948, ¶ 31. That right would be obviously and

repeatedly frustrated if plaintiffs could pounce on losing judgments by filing new lawsuits

asserting the losing party should not have exercised its jury right in the first place.

Appellants’ theory of the case here is also inconsistent with the standard established in

Surace. The decision whether to settle claims or submit them to a jury is obviously “reasonably

related” to that judicial proceeding. O’Brien v. Stein, 47 Ohio App.3d 191, 193, 547 N.E.2d 1213

(10th Dist. 1988) (privilege applied to statements “made during a pretrial conference to the judge

in response to a question regarding the viability of a settlement”); Jackson, 372 F.3d at 1275

(“These actions, taken in the course of settlement negotiations, are inextricably linked to the

process of guiding ongoing litigation to a close—actions we conclude are protected by Florida’s

litigation privilege.”).

Regardless of whether the claims are characterized as challenging statements, conduct, or

communicative acts, they are barred by the privilege. The litigation privilege is more than a mere

pleading game; it exists to protect the exercise of rights in court, however they are later

characterized. As discussed above, Ohio courts have not limited the privilege to “statements”;

they have also applied it to litigation-related conduct. Provident Bank, 1984 Ohio App. LEXIS

9759, at *7 (privilege bars claims based on the filing of a lawsuit); Nationstar Mortg., 2015-

Ohio-3900, ¶ 15 (same); Hines, 2009 U.S. Dist. LEXIS 139834, at *38–39 (barring claim based

on “the act of filing the grievance”). Even the dissenting Judge below agreed that “the litigation

privilege should apply to both ‘statements’ and ‘actions’ made in judicial and quasi-judicial

proceedings.” Reister, 2019-Ohio-4720, ¶ 39 (S.Powell, J., dissenting).

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While this Court has not addressed the exact circumstances presented by this case, the

claims here also easily satisfy the “functional analysis” it applied in Willitzer, 6 Ohio St.3d at

449. As noted above, the Court recognized that the privilege extends to “activities” that are

“intimately associated” with a judicial or quasi-judicial process. Id. It is difficult to imagine

activity more “intimately associated” with the judicial process than the decision whether to settle

or submit claims to a jury. Indeed, “the right of either party … to demand that the issues of fact

therein be tried by a jury” is “one of the most fundamental and long-standing rights in our legal

system” and is specifically enshrined in the Ohio Constitution. Arbino, 116 Ohio St.3d at 474

(citations omitted, emphasis added); Section 5, Article I, Ohio Constitution.3

Appellants’ claims would eviscerate that right. When CSSA opposed ClarkDietrich’s

motion to dismiss, its attorney explained that “the organization wants a decision” from the jury

because “this is the chance to end [the parties’ dispute] on this issue.” (Nov. 16 Trial Trans.,

8405:3–8407:9.) The trial court respected CSSA’s right to have the jury decide the dispute and

denied ClarkDietrich’s motion to dismiss. Had the jury sided with CSSA, its litigation decision

would have been vindicated. Yet, because the jury found in favor of ClarkDietrich, Appellants

seek to second-guess that decision, and effectively argue that CSSA was required to accept

either settlement or dismissal—and that exercising its constitutional right to submit the case to a

jury amounted to a breach of fiduciary duty.

This is the pinnacle of Monday-morning quarterbacking, which the privilege exists to

prevent. If the decision whether or not to have a jury decide claims could form the basis for a

3 For the same reason, the claims here easily fall within the similar—if not even broader—protection other states

have provided for litigation conduct. See Jackson, 372 F.3d at 1275 (privilege covers “all acts related to and occurring within judicial proceedings”); Levin, 639 So. 2d at 608 (privilege covers “any act occurring during the course of a judicial proceeding … so long as the act has some relation to the proceeding”); Scarpelli, 426 Ill. Dec. at 831 (privilege covers “conduct performed within the practice of law”); Clark, 218 W. Va. at 433 (privilege covers “conduct occurring during the litigation process”); Moss, 285 P.3d 1157, 1165–66 (privilege covers “an attorney’s conduct occurring in the course of judicial proceedings”).

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follow-on lawsuit, it would “unduly stifle attorneys from zealously advancing the interests of

their clients” and “clog court dockets with a multitude of lawsuits.” Surace, 25 Ohio St.3d at

235. Courts have not hesitated to apply the privilege to claims challenging this type of core

litigation conduct because “participants [must] be free to use their best judgment in prosecuting

or defending a lawsuit without fear of having to defend their actions in a subsequent civil action

for misconduct.” Levin, 639 So. 2d at 608 (barring tortious interference claim based on decision

not to call a witness); see also Apple Ridge, 2014 N.J. Super. Unpub. LEXIS 174, at *8 (barring

breach of fiduciary duty and other claims alleging bad faith conduct in discovery and opposition

to motion to intervene because parties “must have the ability to make decisions regarding

disputes and litigation without second-guessing”); Jackson, 372 F.3d at 1275–77 (barring

tortious interference and conspiracy claims based on allegedly improper settlement because “that

conduct must be protected so that participants in a lawsuit are unhindered in exercising their

judgement as to the best way to prosecute or defend the lawsuit”); Davis, 268 So. 3d at 770

(sanctioning attorney because he “should have known” that the privilege barred a breach of

fiduciary duty claim based on association members’ refusal to modify an injunction in prior

litigation).

Like the claims rejected in this longstanding line of precedent, Appellants’ claims

challenge CSSA’s assertion of its right to present its case and participate in the legal process.

That falls well within the scope of the privilege articulated by this Court and others across the

country. The lower courts therefore correctly dismissed the claims.

D. Appellants’ arguments for narrowing the privilege are unfounded.

While Appellants characterize their argument as a “narrow construction” of the privilege,

(Receiver Br. at 23), it is far more than that. By asking the Court restrict the privilege to cover

only claims for defamation based on statements in prior litigation, they are in effect asking the

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Court to ignore decades of decisions and implicitly overrule the reasoning offered by the Ohio

courts and the modern majority of state courts in their approach to the privilege. They present no

authority or policy supporting that drastic result.

First, and most importantly, Appellants cite no case—in Ohio or elsewhere—holding that

the decision to litigate to verdict, rather than settle, was not protected by the litigation privilege.

Nor do they offer any reason to believe the exercise of a jury-trial right would not be diminished

and punished if that very choice could lead to the level of liability Appellants seek here.

Second, Appellants argue that other courts have allowed similar claims to proceed. The

cases they cite, however, do not support that argument. For example, the breach of fiduciary duty

claim at issue in AIG Ret. Servs. v. Barbizet, Ch. No. 974-N, 2006 Del. Ch. LEXIS 130 (Ch. July

11, 2006) did not involve the exercise of litigation rights at all. To the contrary, the claim was

based on a board’s refusal to pursue a potential claim relating to a loan agreement.4 Indeed, the

court in AIG did not discuss the privilege. Ohio courts recognize an important (and obvious)

difference between litigation (i.e., a “judicial process”) and non-litigation.

It is unsurprising that courts would exercise great caution before applying the litigation

privilege to non-litigation activity. They impose “greater scrutiny” to ensure any such assertion

of the privilege sufficiently relates to a “judicial process.” See, e.g., Morrison v. Gugle, 142 Ohio

App.3d 244, 260, 755 N.E.2d 404 (10th Dist. 2001) (privilege only covers statements prior to

litigation that are “(1) made in the regular course of preparing for and conducting a proceeding

that is contemplated in good faith and under serious consideration, (2) pertinent to the relief

sought, and (3) published only to those directly interested in the proceeding”).That the AIG court

4 While the plaintiff had included allegations that the directors “failed to give good-faith consideration to several

attractive settlement proposals’” in prior litigation, the plaintiff was clear that those allegations “do not form the basis of [its] breach of fiduciary duties claims.” Id. at *13. Rather, “plaintiff’s sole allegation of breach of fiduciary duty is in connection with the director defendants’ refusal to pursue the [loan] claim.” Id. at *14.

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did not dismiss a claim based on conduct where litigation was never filed does not support

Appellants’ argument that Ohio’s litigation privilege fails to protect the core litigation activity at

issue here, which occurred in the midst of a trial.

Appellants’ reliance on Paige Capital Mgmt., LLC v. Lerner Master Fund, LLC, 22 A.3d

710 (Del. Ch. 2011) is similarly misplaced. The court found that Delaware’s privilege did not

protect a party’s pre-litigation letter that “threaten[ed] to engage in potentially tortious behavior

if the recipient d[id] not surrender to its demands.” Id. at 712. Again, this pre-litigation

communication is not analogous to the core litigation activity at issue here. In addition, the Paige

Capital court emphasized that the letter was a “threat to take future wrongful action.” Id. at 723.

In contrast, the conduct at issue in Appellants’ claims is not a threat of wrongful conduct—it is

CSSA’s decision to exercise its constitutional right “to demand that the issues of fact therein be

tried by a jury.” Arbino, 116 Ohio St.3d at 475. Finally, the Paige Capital court stated that

Delaware’s privilege should be limited to “claims for defamation and related torts.” 22 A.3d at

724–25. This Court, however, has rejected that minority view and held that Ohio’s privilege

broadly applies to bar all “civil liability.” M.J. DiCorpo, 69 Ohio St.3d 497, at syllabus.

A third case Appellants rely heavily on is Ironworkers Dist. Council v. Andreotti, Del.Ch.

No. 9714-VCG, 2015 Del.Ch. LEXIS 135 (May 8, 2015). But that decision likewise did not

discuss the litigation privilege. It actually dismissed a shareholder’s claim based on the alleged

mishandling of settlement negotiations. That decision provides no support for the restriction of

Ohio’s jury right and revision of Ohio’s privilege proposed by Appellants.

Appellants also invoke policy arguments, in the form of a parade of horribles that would

supposedly follow from applying the privilege to the claims at issue in this case. According to

Appellants, if a party cannot be sued for exercising its right to submit claims to a jury, then

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litigants will be free to engage in “bribery of court officials,” “threats to witnesses,” and “assault

by litigants in the courthouse.” (See Receiver Br. at 2.) That is preposterous. The exercise of a

constitutional right to access the courts does not equate to criminal conduct that occurs in the

courthouse. Moreover, this Court recognized in Surace that judges have authority to protect

against “gross abuse of the privilege.” 25 Ohio St.3d at 234. Other courts have had no difficulty

exercising that authority and recognizing that such misconduct is not privileged. See, e.g.,

Raulerson v. Font, 277 So. 3d 1057, 1063 (Fla. App. 2018) (noting the privilege would not bar

stalking or “an action for a battery committed by one attorney against another in the course of a

legal proceeding” because “the privilege or immunity must … have some relation to the

proceeding”).

Appellants also argue that applying the privilege here would extinguish various litigation-

related claims such as malicious prosecution, false arrest, spoliation, abuse of process, and

attorney malpractice. (Receiver Br. at 27; ClarkDietrich Br. at 17–18.) But Ohio courts have

already applied the privilege to conduct during judicial proceedings without destroying the

viability of other litigation-related claims. See, e.g., Provident Bank, 1984 Ohio App. LEXIS

9759, at *7 (privilege barred claims based on filing of lawsuit); Nationstar Mortg., 2015-Ohio-

3900, ¶ 15 (same); Hines, 2009 U.S. Dist. LEXIS 139834, *38–39 (Ohio privilege barred claim

based on “the act of filing the grievance”); Am. Chem. Soc. v. Leadscope, Inc., 133 Ohio St.3d

366, 2012-Ohio-4193 (affirming unfair competition claim based on “sham litigation”); Haller v.

Borror, 10th Dist. Franklin Cty. No. 95APE01-16, 1995 Ohio App. LEXIS 3312, at *9 (Aug. 8,

1995) (rejecting argument that “no one will ever be able to maintain a cause of action for

malicious prosecution” if statements to police are privileged, because the privilege requires

statements to “bear some reasonable relation to the activity reported”). Nor have other

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jurisdictions fallen down the slippery slope Appellants predict. Florida, for example, has

continued to vigorously enforce the broad privilege set forth in Levin while recognizing that the

privilege does not bar claims such as malicious prosecution that “could never occur outside the

context of litigation.” Debrincat, 217 So. 3d at 71; Davis, 268 So. 3d at 770 (sanctioning

attorney for filing a breach of fiduciary duty based on conduct in prior litigation that was clearly

privileged under Levin).

The persistence of these causes of action alongside Ohio’s robust litigation privilege in

fact undermines Appellants’ point. Well-established causes of action exist precisely to police

abuses of the right to litigate. See Erie Cty. Farmers’ Ins. Co. v. Crecelius, 122 Ohio St. 210,

215, 171 N.E. 97, 98 (1930) (noting the privilege would not bar criminal claims for perjury, that

“[o]fficials who transgress the proprieties without justification may of course be subjected to

contempt proceedings,” and that claims for malicious prosecution provide an “additional

safeguard” against abuse of judicial proceedings). But those causes of action do not tolerate

standardless and open-ended second-guessing of core litigation decisions by parties. They target

the misuse of legal process for reasons besides the vindication of legal rights in a final judgment.

Fiduciary claims, in contrast, do not target abuse of the legal process; like other torts barred by

the privilege, they regulate purely private relationships.

The fundamental problem with Appellants’ argument is that it presumes their desire for a

civil remedy to right every perceived wrong is at odds with the very idea of a privilege. This

Court has recognized the tradeoff entailed by any privilege, including the applications of the

litigation privilege that Appellants readily concede. “Although the result may be harsh in some

instances and a party to a lawsuit may possibly be harmed without legal recourse, on balance, a

liberal rule of absolute immunity is the better policy.” Surace, 25 Ohio St.3d at 234. Appellants

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have presented no authority or argument that justifies departing from that reasoning and

drastically narrowing the scope of Ohio’s litigation privilege.

Counter-Proposition of Law No. 2: The business judgment rule does not displace the litigation privilege.

Appellants argue that “immunizing corporate directors is unnecessary because they have

adequate protections under the business judgment rule.” (Receiver Br. at 21). That argument

ignores the fundamental differences between the business judgment rule and the litigation

privilege. Reliance on the business judgment rule alone would disserve the purpose of the

privilege and harm Ohio businesses.

The business judgment rule and the litigation privilege serve fundamentally different

roles. The purpose of the business judgment rule is “to free fiduciaries making risky business

decisions in good faith from the worry that if those decisions do not pan out in the manner they

had hoped, they will put their personal net worths at risk.” In re Massey Energy Co., 2011 Del.

Ch. LEXIS 83, at *82 (Del. Ch. May 31, 2011); see Miller v. Bargaheiser, 70 Ohio App. 3d 702,

707, 591 N.E.2d 1339 (3d Dist. 1990) (“[T]he purpose of the business judgment rule … is

premised on the expertise of the directors to render important business decisions without

interference by the courts or shareholders.”) (emphasis added). It is intended to govern private

business dealings where there is no “objective judge” to enforce standards of conduct in real-

time. See Surace, 25 Ohio St.3d at 234. It is not designed to fulfil the privilege’s lofty goal of

“protecting the integrity of the judicial process.” Willitzer, 6 Ohio St.3d at 449. And it is not

designed to “promot[e] complete and truthful testimony, encourage[e] zealous advocacy, giv[e]

finality to judgments, and avoid[ ] unending litigation.” Silberg, 50 Cal. 3d at 214–15.

The business judgment rule cannot fill the distinct, targeted role of the litigation

privilege. The privilege allows parties to pursue their claims and defenses “without fear of

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consequences” precisely because it provides an absolute defense that short-circuits any follow-

on litigation at its inception. See Willitzer, 6 Ohio St.3d at 449. In contrast, to successfully

invoke the protection of the business judgment rule, defendants will often have to expend

substantial time and resources in discovery, summary judgment proceedings, and ultimately trial.

That lesser protection is insufficient to eliminate the chilling effect of “endless lawsuits” that

underlies the privilege. See Surace, 25 Ohio St.3d at 234.

Relying solely on the lesser protection of the business judgment rule to protect litigation

conduct will also harm Ohio businesses—including the thousands of businesses the Chamber

comprises. Ohio businesses will bear the costs of the additional follow-on litigation that

Appellants’ propositions would allow. These include the direct costs of insuring directors and

officers, indemnification obligations, and the litigation expense of discovery and defending

against derivative claims. These also include the indirect (but very real) costs of the distraction

imposed on firms by long-running litigation, the fear of asserting legal rights in a manner subject

to later challenge, the reputational risk of repeated public trials, and the increased pressure to

settle. In a world in which the business judgment rule is all that is left to defend against the threat

of follow-on litigation about settlement decisions, businesses will undoubtedly be deterred from

vigorously prosecuting their claims or defenses, and will face second-guessing of virtually every

settlement as being either too aggressive or too weak.

The impact of Appellants’ proposed rule would also have broader effects on Ohio’s

economy. If directors and officers could be sued individually for litigation conduct, it would be

more difficult for Ohio businesses to attract and retain top-tier talent. The combination of that

loss of talent and the additional costs of follow-on litigation would ultimately make Ohio

businesses less competitive in the national and global marketplace. Ohio businesses are already

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facing significant challenges due to recent economic shifts, and Appellants have presented no

justification for compounding their burdens by piling on the threat of additional litigation. The

Court’s broad and flexible approach to the litigation privilege strikes the proper balance, and

should be applied to bar the claims at issue here.

IV. CONCLUSION

The lower court decisions correctly held that the litigation privilege bars the Appellants’

follow-on claims. The propositions of law advanced by Appellants are inconsistent with Ohio

law, out of step with the law of other states, and raise serious concerns for Ohio businesses. The

Ohio Chamber of Commerce respectfully requests that Appellants’ propositions of law be

rejected and the lower court decisions affirmed.

Respectfully submitted,

/s/ Lauren S. Kuley Lauren S. Kuley (0089764) Counsel of Record Benjamin Beaton (0098525) SQUIRE PATTON BOGGS (US) LLP 201 E. 4th Street, Suite 1900 Cincinnati, Ohio 45202 Phone: (513) 361-1200 Facsimile: (513) 361-1201 benjamin.beaton@squirepb.com lauren.kuley@squirepb.com

Kevin D. Shimp (0097660) Ohio Chamber of Commerce 34 S. Third St., Suite 100 Columbus, OH 43215 Phone: (614) 228-4201 KShimp@ohiochamber.com

Counsel for Amicus Curiae Ohio Chamber of Commerce

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CERTIFICATE OF SERVICE

I hereby certify that on June 17, 2020, a copy of the foregoing was filed electronically with the Clerk of the Ohio Supreme Court, and that a copy of the foregoing was served upon the following by email:

Daniel R. Warncke (0061799) Aaron M. Herzig (0079371) TAFT, STETTINIUS & HOLLISTER LLP 425 Walnut Street, Suite 1800 Cincinnati, OH 45202-3957 Phone: (513) 381-2838 warncke@taftlaw.com aherzig@taftlaw.com Jeffrey M. Pollock Robert J. Rohrberger Allison L. Hollows FOX ROTHSCHILD LLP 997 Lenox Drive Lawrenceville, NJ 08648-2311 Phone: (609) 896-3600 jmpollock@foxrothschild.com rrohrberger@foxrothschild.com ahollows@foxrothschild.com Counsel for Appellee William A. Gardner Peter J. Georgiton (0075109) Justin M. Burns (0093686) DINSMORE & SHOHL LLP 191 W. Nationwide Blvd., Ste. 300 Columbus, OH 43215-5134 Phone: (614) 628-6963 peter.georgiton@dismore.com justin.burns@dinsmore.com Scott M. Ratchick John C. Guin CHAMBERLAIN HRDLICKA 191 Peachtree Street, N.E., 46thfloor Atlanta, GA 30303 Phone: (404) 659-1410 scott.ratchick@chamberlainlaw.com john.guin@chamberlainlaw.com Counsel for Appellee Edward R. Slish

James B. Helmer, Jr. (0002878) Robert M. Rice (0061803) Jennifer L. Lambert (0075762) B. Nathaniel Garrett (0090939) HELMER, MARTINS, RICE & POPHAM CO., L.P.A. 600 Vine Street, Suite 2704 Cincinnati, OH 45202 Phone: (513) 421-2400 Fax: (513) 421-7902 jhelmer@fcalawfirm.com rrice@fcalawfirm.com jlambert@fcalawfirm.com ngarrett@fcalawfirm.com Counsel for Appellant Receiver John J. Reister Steven A. Tooman (0066988) Heather Sanderson Lewis (0069212) MILLIKIN & FITTON LAW FIRM 9032 Union Centre Blvd., Suite 200 West Chester, OH 45069 Phone: (513) 863-6700 tooman@mfitton.com lewis@mfitton.com Counsel for Appellant Receiver John J. Reister D. Jeffrey Ireland (0010443) Stephen A. Weigand (0083573) Jason W. Palmer (0088336) FARUKI IRELAND COX RHINEHART & DUSING PLL 201 East Fifth Street, Suite 1420 Cincinnati, OH 45202 Phone: (513) 632-0300 djireland@ficlaw.com sweigand@ficlaw.com jpalmer@ficlaw.com

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Counsel for Intervenor-Plaintiff Certified Steel Stud Association, Inc. Matthew Blickensderfer (0073019) Simon Y. Svirnovskiy (0097096) FROST BROWN TODD LLC 3300 Great American Tower 301 East Fourth Street Cincinnati, Ohio 45202 Phone: (513) 651-6162 mblickensderfer@fbtlaw.com ssvirnovskiy@fbtlaw.com Anthony Cillo Fridrikh V. Shrayber (0095330) COHEN & GRIGSBY, P.C. 625 Liberty Avenue Pittsburgh, PA 15222-3152 Phone: (412) 297-4900 tcillo@cohenlaw.com fshrayber@cohenlaw.com Counsel for Appellant ClarkWestern Dietrich Building Systems LLC dba ClarkDietrich

/s/ Lauren S. Kuley One of the Attorneys for Amicus Curiae The Ohio Chamber of Commerce