A New York state judge has dismissed a defamation case against the Gemological Institute of America for claiming a batch of diamonds had been treated to improve their color.
In 2015, the GIA grading lab said it had discovered approximately 500 diamonds that it believed had been treated by a previously unknown color-improving process. It also banned and named the four Israeli companies that it claimed submitted the diamonds to its lab.
The following year, two of those companies—L.Y.E. Diamonds and E.G.S.D. Diamonds—filed suit in New York state supreme court charging GIA and Rapaport Corp. with defamation, trade libel, and tortious interference with a contractual relationship, among other counts.
“[The two companies] never treated any diamonds submitted to GIA with a process that temporarily masks the inherit color of a diamond and can lead to a higher grade,” said the complaint.
Last week, that action was dismissed by Judge Barry Ostrager, who noted that the GIA client agreement gives it the right to “make public” the names of clients it reasonably suspects are treating diamonds. In his opinion, Ostrager wrote that GIA has a “qualified common interest privilege” to make the names public, which can only be overcome by “actual malice.” And while the complaint alleged malice, it did not offer any facts to back that up, Ostrager ruled.
The two companies still have a suit against Rapaport Corp., which published the GIA bulletin. Currently, the two sides are conducting discovery on a jurisdictional issue.
GIA spokesperson Stephen Morisseau said it was “pleased” with the ruling. The diamond companies’ attorney did not return a request for comment.