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Taft wins defamation lawsuit in appellate court

April 5, 2017

An Illinois appellate court has affirmed the law firm of Taft Stettinius & Hollister LLP did not defame a private business in a newsletter emailed to clients.   

The Appellate Court of Illinois, First Judicial District, Sixth Division, issued an order Friday dismissing a defamation lawsuit brought by a Universal Gaming Group, which owns and operates video game machines such as poker and blackjack. Affirming the Cook County trial court’s ruling, the court of appeals ruled attorney Paul Jenson’s statements in the email were substantially true.

Also in Universal Gaming Group v. Taft Stettinius & Hollister LLP and Paul Jenson, 1-15-0878, both the trial and appellate courts barred the plaintiffs from returning and pleading a different argument in this case.

Cezar Froelich, chairman of Taft’s Chicago office, described the case as “without merit” and said the firm has not formally changed any policies concerning attorney blogs, newsletter or email updates.

The email at the heart of the dispute was one of the regular updates that Jenson sends to clients. The attorney, who concentrates part of his practice in the gaming industry, summarizes the monthly meetings of the state body to help keep interested parties informed.

“We were pretty surprised the plaintiff took umbrage (at the email),” Froelich said, describing the case as “somebody being way oversensitive to an offhand remark.”

The company UGG declined to comment.  

UGG filed the lawsuit in 2014 after Jenson wrote and emailed an update that recapped recent actions by the Illinois Gaming Board. As part of the electronic newsletter, Jenson summarized the settlement agreement between UGG and the IGB.   

The settlement with the gaming board made no finding of wrongdoing by the company but required a UGG employee resign and levied a $50,000 fine.

Jenson wrote, “So for the scores of Terminal Operators that have struggled with UGG’s sales agents in the past, this Settlement Agreement apparently means those individuals have found religion and will not act outside the IGB’s rules and policies.”

UGG claimed the email tarnished its reputation with prospective clients. The company alleged defamation per se because the email made false statements that UGG lacked integrity and failed to comply with Illinois law or general business ethics.

In particular, UGG argued Jenson’s email about that settlement agreement indicates an employee failed to follow the law. The company pointed out the gaming board did not find that the company has violated the statutory requirements for renewing its license.

The appellate court disagreed, noting just because UGG’s license was renewed does not mean that the statement about employee misconduct was “demonstrably false.” The settlement recited specific allegations of misconduct and, as the court pointed out, the investigation was closed without any finding that misdeeds had not occurred.

Also contrary to UGG argument, the court concluded that Jenson’s other statements were opinion and capable of innocent construction. Justice Joy Cunningham maintained that the language was loose, ambiguous and imprecise which made verifying the statements difficult.  

“Viewing the Jenson email in context, we have no difficulty concluding that its statements are capable of innocent construction,” Cunningham wrote. “… A reasonable reader could view the email’s summary of the IGB-UGG settlement not as a defamatory attack on UGG, but as an educational example of the potential consequences (such as the settlement’s remedial measures) for engaging in the behavior that was alleged against UGG’s employee.”

The appellate also affirmed the dismissal of UGG’s allegation of commercial disparagement and claim of a violation of the Illinois Deceptive Trade Practices Act.

Taft and Jenson had made a cross-appeal, arguing the trial court should have dismissed the complaint on the basis of the state’s Citizen Participation Act rather than under section 2-615 of the Illinois Code. The appellate court dismissed the motion, pointing out the defendants had already received the relief they sought.   

Froelich said the firm was confident of the outcome so it did not hire outside counsel but instead used its own litigators to fight the defamation complaint. He noted the dispute cost the firm time and, while not bringing any formal changes, likely made the attorneys think more about what they write in blogs and newsletters.

“Is the firm and practicing partners a little bit more careful?” Froelich asked. “Sure, it’s just human nature.”

 

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