An investigator that had to pay "counter-cult deprogrammer" Rick Ross after it was tapped to investigate the disappearance of a NXIVM student must keep fighting for indemnification, a federal judge ruled.
The legal battle between NXIVM and its former investigator, Interfor, is an offshoot of the group's nearly-10-year-old defamation complaint against Ross, a consultant and lecturer who specializes in exit counseling and deprogramming of cult members.
NXIVM, an Albany, N.Y.-based organization started by Keith Raniere, purports to offer ethics training through Executive Success Programs (ESP). Pronounced "nexium," the group was also formerly known as First Principles Inc.
In an August 2003 complaint, NXIVM claimed that Ross had called it a cult that was responsible for the disappearance of its former student, Kristin Snyder.
Ross wrote on his website that 35-year-old Snyder had committed suicide as a result of her involvement with the organization.
NXIVM also claims that Ross' articles disclosed its proprietary materials and trade secrets.
It hired Interfor to privately investigate Snyder's disappearance and, ultimately, Ross himself. The organization agreed on Nov. 23, 2004, to indemnify Interfor for investigative costs, including attorney's fees.
Ross eventually served a non-party subpoena on Interfor for investigation records, and Interfor ultimately settled the claim Ross brought against it for $25,000 in 2008.
Although NXIVM at first covered the costs Interfor incurred while fighting to quash Ross' subpoena and defended against his counterclaims, Interfor said the payments stopped in February 2007.
U.S. District Judge Dennis Cavanaugh refused to grant either the organization or its former investigator summary judgment on June 26.
"The court finds that a genuine issue of material fact exists in whether Interfor's actions with regards to the Ross investigation were approved by NXIVM," the unpublished opinion states. "As the indemnity agreement is 'limited to that part of such investigation, or any part thereof, which was requested and/or agreed to by NXIVM/ESP or disclosed to NXIVM/ESP by Interfor without any objections thereto by NXIVM/ESP,' it is material to this summary judgment motion whether NXIVM objected to the work Interfor undertook on its behalf."
The parties have "hotly disputed" whether NXIVM objected to Interfor's work, requested the Ross investigation, suggested the ex parte contact with Ross, or ratified Interfor's conduct, according to the ruling.
It is also unclear whether Interfor raided Ross' garbage, delivered a report on Ross' activities or engaged in illegal activity, the judge found.
NXIVM failed to convince the court that indemnity does not apply because it objected to "every single thing that Ross complains of against Interfor."
"It is exceedingly clear to this court that summary judgment at this stage would be inappropriate," Cavanaugh wrote. "The issues the parties ask this court to dispose of turn exclusively on questions of fact. Thus both parties' motions must be denied."
In March 2009, NXIVM sued Albany's Metroland Magazine for pegging it as a cult, and a Niagara Falls couple who hired Ross to deprogram their son.