The Nevada Supreme Court recently ruled that an accounting firm is legally protected from a defamation lawsuit filed by a pair of Las Vegas businessmen. The Court affirmed the lower court’s dismissal of the commercial litigation on the theory that the defendant had a legal privilege, even if what they said about the plaintiffs was defamatory.

The plaintiffs are the founders of Global Cash Access Holdings Inc., a Nevada-based company that provides cash access services for casinos. The company was audited by Deloitte & Touche, a nationwide accounting firm. At some point in the audit, the firm learned that the plaintiffs were supposedly being investigated by the FBI for white-collar crimes, including tax fraud and miscoding of financial transactions with casinos.

The information apparently was not accurate and an independent investigation later cleared the plaintiffs of wrongdoing. However, the Deloitte & Touche accountants who performed the audit told Global Cash’s audit committee about the purported FBI probe. The plaintiffs later sued for defamation, saying that the disclosure cost the business $400 million and that they personally lost more than $100 million.

The trial court dismissed the lawsuit on the grounds that the defendant had a legal privilege against liability for defamation. One May 30, the Nevada Supreme Court affirmed that decision. In its written decision, the Court said that the defendant was legally obligated to disclose the information about the federal investigation, even if it turned out to be false. Other states have found a privilege against defamation litigation when a party must legally pass along information, and the Court said that was true under Nevada law as well.

Source: Las Vegas Sun, “Two businessmen who say they lost $100 million over defamation lose appeal,” Cy Ryan, May 30, 2013