Illinois Appellate Court Revives Company’s Defamation suit against Competitor

The First District Illinois Appellate Court recently overturned a Cook County Circuit Court’s dismissal of a company’s defamation suit against a competitor. In its ruling, the Court held that a Chicago shipping company can claim it was defamed by emails sent to its management disparaging the company. Having cleared the hurdle of establishing a viable claim, the plaintiff company will now need to establish that it suffered reputational damage.

The allegations in this defamation suit stem from a series of anonymous emails sent in May 2019 to various board members and at least one executive of the plaintiff, project44, Inc. The complaint alleges that these emails purported to warn the project44 board members and executive of accounting fraud at project44 and connections to Chicago organized crime. Project44 allegedly was able to trace the email messages to computers used by a competitor, FourKites. Following receipt of the emails and its investigation into their source, project44 filed a commercial defamation suit against FourKites and several unknown FourKites employees.

In response, FourKites sought dismissal of the suit arguing that project44 could not sustain a defamation claim because project44 could not establish that the allegedly defamatory statements were published to any third parties. FourKites argued that no publication occurred because the emails were essentially sent to project44 itself and not to a third party. The trial court agreed with FourKites and dismissed the suit.

On appeal, the Court began its analysis by explaining that in a defamation suit, it is not sufficient that the allegedly defamatory statements be made to the plaintiff. The reason for this is that because the harm from libel is to one’s reputation in the eyes of the community, defamation requires that the statements be published to a third party. The Court rejected the trial court’s conclusion that because the allegedly defamatory claims were only published to project44’s officers and agents, the emails were essentially published to project44 itself and that the recipients could not be considered “third parties” apart from the company.

After laying out the trial court’s conclusion and reasoning, the Court succinctly responded: “We do not agree.” Elucidating further, the Court wrote that, “our law has long recognized that a corporation can have its own reputation and identity, and if that reputation is attacked, it may use defamation actions to defend itself.”

“Perhaps the most fitting illustrations of this point would be those involving corporate sabotage,” wrote the Court. “A competitor might communicate false statements about Corporation A to employees of Corporation A in the hopes of damaging the corporation’s reputation among its workforce—whether to generally sow discontent, throw a wrench in its productivity, cause valuable employees to leave, or even steal away those employees.”

Returning back to the allegations in project44’s complaint, the Court found the allegations sufficient to state a viable claim for defamation—including the necessary element of publication. “Simply put, the complaint alleges that FourKites was sending false, destructive messages to high-ranking officers and directors of project44, obviously intending to cause damage to project44 in various ways. It would be unrealistic, unfair, and contrary to any principle of defamation law we recognize to embrace the artifice that these directors and officers were merely part and parcel of the corporation, that no harm to project44’s reputation occurred because nobody besides the corporation itself received these messages. We thus hold that, by alleging the transmission of defamatory messages about project 44 to directors and an officer of project44, the complaint adequately alleges publication.” The Court ordered the suit back to circuit court for further proceedings.

The Court’s full opinion is available here.

Our Elmhurst and Oak Brook defamation attorneys represent and prosecute claims on behalf of individuals throughout Chicago and the surrounding counties as well as businesses who have been unfairly and falsely defamed by consumers and competitors in online and offline statements. We have successfully represented businesses who have been the victim of competitors setting up false rating websites in order to publish defamatory content about our business clients. Beyond defamation law, our Chicago and Cook County defamation, libel, and slander lawyers represent family businesses and enterprises of all sizes in a variety of commercial disputes, including disputes among partners and shareholders as well as lawsuits between businesses and consumer rights, auto fraud, and wage claim individual and class action cases. In every case, our goal is to resolve disputes as quickly and successfully as possible, helping business clients protect their investments and get back to business as usual. We serve clients throughout Illinois and the Chicagoland area. You can contact us online here or call us on our toll-free number at (833) 306-4933 or locally at (630) 333-0333.

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