(CN) - LivingSocial should not face libel claims from a former marketer it accused of sharing secrets with the competing deal website, Travelzoo.com, a federal judge ruled.
In 2010, LivingSocial hired Wendy Murphy as a marketing consultant for its website, which offers daily discount vouchers for local businesses and vacation packages.
When Murphy resigned from the company in March 2012, Seth Brown, head of litigation at LivingSocial, sent a letter reminding her of a noncompete agreement she signed.
The letter also stated that he suspected Murphy of sharing information with Travelzoo, a competitor of LivingSocial in the vacation deal industry.
In addition to informing Murphy that LivingSocial was considering legal action against her, Brown also informed Travelzoo of Murphy's noncompete agreement.
Five days after Brown sent the letter, Murphy filed a lawsuit in Illinois, later transferred to the District of Columbia, for breach of contract and violation of the Illinois Wage Payment and Collection Act. She also accused Brown individually of libel per se.
U.S. District Judge Emmet Sullivan upheld the venue transfer Monday, ruling that the choice-of-law clause in Murphy's employment contract is reasonable given LivingSocial's headquarters in the district.
The choice-of-law clause additionally applies to Murphy's libel claim because it is "inextricably intertwined with, and arises out of, plaintiff's employment with LivingSocial," according to the ruling.
After establishing proper jurisdiction, Emmet dismissed the libel claim against Brown entirely.
"The court finds that the statements in the letter indicate that litigation was under serious consideration," Sullivan wrote. "Furthermore, the statements in the letter bear a clear relationship to the dispute because they defined the nature of the dispute. Accordingly, the court finds that the Travelzoo Letter is protected by the judicial proceedings privilege."
Murphy also gave LivingSocial permission to share the terms of the noncompete agreement with prospective employers, the court found.
"The statements made in the letter, alleging plaintiff had violated the restrictive covenants of the non-compete agreement, were directly relevant to the purpose for which consent was given," Emmet wrote. "Finally, the publication of the statement was limited to Travelzoo's human resources director, who had a legitimate interest in the content of the statements. Accordingly, the letter is protected by the privilege of consent, and plaintiff's claim fails."
Murphy's other claims against LivingSocial remain pending.
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