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"They're Bad-Mouthing the Business": Suing for Defamation and Related Claims on Behalf of a Corporation and Its Officers

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"They're Bad-Mouthing the Business": Suing for Defamation and Related Claims on Behalf of a Corporation and its Officers Your business client wants r our client is a large corporation. The client's you to respond to lies competitor has made negative comments about your client and its CEO, and the client is enraged. being told by competitors y The client now seeks your advice. or others. What can you What claims do the client and its CEO have against the competitor? What do? This article reviews the remedies are available to each of them? Can the competitor be enjoined from making similar negative comments in the future? These are questions you'll various theories under which need to answer. This article includes an introduction to general Illinois defamation law and you might sue on behalf then looks at special rules governing corporate plaintiffs. It also discusses defa- of businesses and their mation-oriented variants, some of which are available to corporate plaintiffs but not natural persons. principals. Suing on behalf of the CEO: a primer on general defamation law The first thing to understand about your hypothetical client's situation is that there are two different plaintiffs: the client itself, which is a corporation, and the client's CEO, who is a natural person. The claims and remedies avail- able to each are different and must be analyzed separately. This section will briefly canvass Illinois defamation law as it applies to natu- ral persons, which will also provide a backdrop for the analysis of corporate defamation claims. Defamation law is the subject of multi-volume treatises, By Joseph J. Siprut of course, so this is merely an introduction that raises some of the key issues. To state a cause of action for defamation, a plaintiff must allege (1) the de- fendant made a false statement about the plaintiff, (2) there was unprivileged publication of the defamatory statement to a third party with fault by the Joseph Siprut <[email protected] > is an attorney with Schopf & Weiss LLP, a Chicago-based business litigation boutique. 528 1 ILLINOIS BAR JOURNAL I OCTOBER 2010 I VOL. 98 defendant, and (3) the publication dam- made with actual malice, the plaintiff (1st D 1986). aged the plaintiff. Each element is dis- 2. O'Donnell at 1040, 491 NE2d at 1218. must prove by clear and convincing evi- 3. This multifactor test was developed by the Dis- cussed below. dence that the defendant published de- trict of Columbia Court of Appeals in Oilman v Ev- False statement about the plaintiff. famatory statements with knowledge ans, 750 F2d 970, 984-85 (DC Cir 1984), and cited with approval by the Illinois Supreme Court in Mittel- Opinions generally do not constitute def- that the statements were false or with man v Witous, 135 III 2d 220, 243-44, 552 NE2d 973, amation, but an opinion that "implies reckless disregard for truth or falsity."' 984 (1989). undisclosed defamatory facts" can be ac- Reckless disregard for the truth exists 4. American Intl Hospital v Chicago Tribune Co, 136 Ill App 3d 1019, 483 NE2d 965. See also Ill Const tionable.' Moreover, whether a statement only where the evidence shows that the art I, § 4 ("In trials for libel, both civil and criminal, is fact or opinion is a question of law to defendant entertained serious doubts the truth, when published with good motives and for be decided based on about the truth of the statements.' justifiable ends, shall be a sufficient defense."). 5. Kessler v Zekman, 250 Ill App 3d 172, 180, 620 [a] whether the statement has a precise Limited purpose public figures need NE2d 1249, 1254-55 (1st D 1993). core of meaning for which a consensus only establish actual malice in defama- 6. See New York Times Co v Sullivan, 376 US 254 (1964). of understanding exists, or conversely, tion actions involving controversies in whether the statement is indefinite and 7. Kessler at 174-75, 181, 620 NE2d at 1251, "which they have chosen to accept a lead- 1255. ambiguous; [b] whether the statement is ership role."" If the defamation action is 8. Pease v Intl Union of Operating Engineers, 208 verifiable, i.e., capable of being objectively Ill App 3d 863, 872, 567 NE2d 614,620 (2d D 1991). characterized as true or false; [c] whether unrelated to those controversies, the lim- 9. Id. the literary context of the statement would ited purpose public figure need not prove 10. Kessler at 180, 181, 620 NE2d at 1255. actual or York malice, and is 11. Id. influence the average reader's readiness to New Times 12. Troman v Wood, 62 Ill 2d 184, 198, 340 NE2d infer that a particular statement has fac- instead held to the less stringent private 292, 299 (1975) ("[I]n a suit brought by a private in- tual content; and [d] whether the broader person standard." Illinois law requires dividual to recover actual damages for a defamatory publication whose substantial danger to reputation is only that a private plaintiff apparent, recovery may be had upon proof that the establish "negligent" defa- publication was false, and that the defendant either mation." This is true even knew it to be false, or, believing it to be true, lacked reasonable grounds for that belief. We hold further Though common law defamation if the statement involves a that negligence may form the basis of liability regard- matter of public interest:3 less of whether or not the publication in question actions can be brought by One other related to a matter of public or general interest."); Privileges. Edwards v Paddock Publications, Inc, 327 Ill App 3d corporations, they are deemed factor in determining the 553, 763 NE2d 328 (1st D 2001). relevant standard of fault 13. Troman at 198, 340 NE2d at 299. Accord Im- perial Apparel, Ltd v Cosmos' Designer Direct, Inc, to have no personal reputation is whether any privilege 227 In 2d 381, 395, 882 NE2d 1011, 1020 (2008) and to be incapable of applies to protect the de- ("In contrast to a plaintiff's status, the content of the fendant. In Illinois, certain challenged speech, specifically, whether it addresses a matter of public concern, does not determine the sustaining emotional injury. types of statements enjoy standard of liability."); Rosner v Field Enterprises, "absolute privilege" status, Inc, 205 Ill App 3d 769, 564 NE2d 131 (1st D 1990). while others are condition- However, the second district recently wrote that "be- cause the statements at issue are a matter of public ally privileged. Whether concern, punitive damages may not be imposed absent an absolute or conditional a showing of actual malice." Green v Rogers, 384 social context or setting in which the state- App 3d 946, 963, 895 NE2d 647, 664 (2d D 2008). ment appears signals a usage as either fact privilege applies is decided as a matter of 14. Zych v Tucker, 363 Ill App 3d 831, 844 NE2d or opinion.' law, and the defendant has the burden of 1004 (1st D 2006). establishing the privilege:4 15. Id. Practitioners should note that whether a pro- In addition, truth — or more specifi- ceeding qualifies as "quasi-judicial" is itself a complex cally, "substantial truth" — is a defense to Statements that might otherwise be issue, for which caselaw should be consulted. See, for defamation.' defamatory are protected by an abso- example, id. lute privilege if made during legislative, 16. Id. Unprivileged publication of the de- 17. Illinois's statute — titled the "Citizen Participa- famatory statement to a third party with judicial, or, in some cases, "quasi-judi- tion Act" (CPA) — applies to: s fault by the defendant. The applicable cial" proceedings.' An absolute privilege [A]ny motion to dispose of a claim in a judicial proceeding on the grounds that the claim is based standard of "fault" depends on whether provides complete immunity from civil on, relates to, or is in response to any act or acts your CEO client is a private individual or action even if the statements are made of the moving part in furtherance of the moving with malice: 6 Practitioners should also party's rights of petition, speech, association, or to public figure. It is much harder for a pub- otherwise participate in government. lic figure to sue for defamation. carefully consider Illinois' new "anti- Acts in furtherance of the constitutional right to Private versus public figures. A person SLAPP" statute, which appears to afford petition, speech, association, and participation in a new, absolute privilege for any defama- government are immune from liability, regardless may be deemed to be a public figure if of intent or purpose, except when not genuinely he or she receives such fame and notori- tory statements communicated while at- aimed at procuring favorable government action, tempting to procure "favorable govern- result, or outcome. ety as to become a public figure in all cir- 735 ILCS 110/15. cumstances. Alternatively, a person may ment action." As commentators have It is beyond the scope of this article to analyze the become a "limited purpose" public fig- pointed out, this standard is extremely scope and implications of the CPA. For a recent and broad — notably broader than the anti- thorough analysis of this statute, see Eric M. Madiar ure by voluntarily injecting himself into and Terrence J. Sheahan, Illinois' New Anti-SLAPP a controversy.' SLAPP statutes of other states.'' Statute, 96 Ill Bar J 620 (Dec 2008). For additional General purpose public figures must analysis, see Mark J. Sobczak, Slapped in Illinois: The 1. Vickers v Abbott Labs, 308 Ill App 3d 393, 400, Scope and Applicability of the Illinois Citizen Partici- always establish actual ("New York 719 NE2d 1101, 1107 (1st D 1999).
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