Before the Court En Banc. Opinion by Justice Cherry.
In this appeal, the Court considered whether information divulged by a registered accounting firm in accordance with the Securities Exchange Act of 1934 is subject to an absolute privilege in a defamation action. The Court answered in the affirmative, holding that such a firm should be encouraged to freely disseminate information concerning alleged illegal acts so long as the disclosure is made pursuant to federal securities law and made to the appropriate level of management. Respondents served as independent auditors for the Appellants’ employer, a company that supplied cash access services to the gaming industry. Respondents discovered information about alleged illegal acts committed by the Appellants and Appellants’ employer. The Respondents then communicated the allegations to the Audit Committee of the Appellants’ employer. The employer conducted an internal investigation and found no evidence of wrongdoing by the Appellants or the company; shortly thereafter, however, the Appellants resigned from the Board of Directors and filed a defamation complaint against the Respondents. The Court adopted section 592A of the Restatement (Second) of Torts, holding that those who are required by law to publish defamatory statements are absolutely privileged in making such statements provided that the communications are made (1) pursuant to a lawful process and (2) to a qualified person. Thus, because the Respondents had made the potentially defamatory statements “in the discharge of a duty under express authority” of federal securities law, and because those statements were made to the employer’s Audit Committee (a qualified person under federal securities law), Respondents were entitled to absolute privilege. Affirmed. Rory T. Kay, Associate in the Las Vegas office of McDonald Carano Wilson LLP).
