False Advertising and Defamation

Court Denies Motion to Dismiss Company Defamation Claim Against Business School Professors

  |   Tuesday, October 02, 2012

In a recent internet law case, a company recently brought a defamation claim against two business school professors for defamation based on statements published on the professors’ blogs.  The professors moved to dismiss the defamation claim, arguing that their blogs contained opinions and not statements of fact.  The court denied the defendants’ motion to dismiss, finding that the statements on the blogs were capable of defamatory meaning and were not protected as opinions.

The plaintiff, Zagg, Inc., is a publicly traded company that specializes in the production, marketing, and distribution of consumer electronic accessories.  Defendants are business school professors and co-authors of a blog about business and accounting.  Defendants published an article on their blog called “Don’t Gag on Zag, “ which contained the following statements, among others, which the defendants alleged were false and defamatory:

  • “The numbers are giving off so much smoke that we think management may have blinded both the auditors and investors.”
  • “At worst, management may be ‘cooking the books.’ “
  •  “Still not convinced that ZAGG management is massaging the numbers? Maybe the following will make the hairs on the back of your neck stand up.”
  • “This is a financial reporting debacle in the making.”

Based on these statements, Zagg filed a complaint alleging claims against the Defendants for  defamation.

The court first found that the statements at issue were not merely nettlesome or embarrassing, but rather were capable of damaging Zagg's reputation. The statements directly impeached Zagg's honesty and even implied criminality.  The court next noted that even statements of opinion are actionable when the underlying facts implied by the opinions are not protected.  Thus, the court found that the statements at issue were not protected opinion because they implied false numbers, fraudulent activity, and criminality.  Thus, the court denied the defendants’ motion to dismiss.

ZAGG, Inc. v. Catanach, No. CIV.A. 12-4399 (E.D. Pa. Sept. 27, 2012)

This entry was posted on Tuesday, October 02, 2012 and is filed under False Advertising and Defamation, Internet Law News.






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