The Seventh Circuit federal appeals court recently determined that a Wisconsin newspaper did not commit defamation when it published a 2018 story concerning a local financial adviser. In affirming the district court’s finding in favor of the newspaper, the Seventh Circuit found that the allegedly defamatory article was largely accurate and protected under what is known under Wisconsin law as the judicial-action privilege, which protect publishers who report on court activity.
In August 2018, the Wausa Daily Herald published an article by reporter Sam Wisneski titled Wisconsin financial advisor accused of violating a dead man’s trust, mishandling $3 million. In the article Wisneski chronicled the allegedly bad-faith handling of the $3 million trust of deceased Wisconsin man Joe Geisler by his financial advisor, Thomas Batterman.
The story recounted the life of Geisler who, upon his death at the age of 88, left his more than $3 million estate to charity with detailed instructions to divide the money equally among four specific charities: the Superior Diocese of the Catholic Church, Bruce High School in northwestern Wisconsin, the Alzheimer’s Association and the American Cancer Society for local events.
A local wealth management firm, Vigil Asset Management, which was operated by Batterman, was made trustee and tasked with administrating the trust holding Geisler’s money. Batterman administered the trust but nearly a year after Geisler died, Batterman had allegedly only distributed $80,000 of the trust’s assets. This led the American Cancer Society to file suit in a Wisconsin state court to seek the removal of Vigil and Batterman as administrator of the trust.
The article detailed the judicial proceedings of the suit against Batterman and recounted the state court’s ultimate decision to remove Batterman and install a successor trustee, who disbursed the trust’s assets immediately. The article also mentioned how the court in that suit concluded that Batterman violated his fiduciary duties owed to the trust. The article went on to recount that the court ordered Batterman to pay the beneficiaries’ litigation expenses because his conduct “amounted to something of bad faith, fraud or deliberate dishonesty.”
Batterman initially demanded that the Daily Herald retract the article. Instead, the newspaper updated the article the following month by including a new paragraph clarifying that “[a]lthough a judge later found that Batterman had not committed fraud, theft or embezzlement, he ruled that the financial adviser had engaged in multiple acts of ‘bad faith’ and ordered him to be removed from handling the Geisler trust and to pay part of the charities’ legal fees.” The updated article also added the modifier “criminal” before the noun “wrongdoing” so that the sentence read: “Neither Batterman nor Richards has been charged with any criminal wrongdoing in the Geisler case.”
In October 2019, Batterman sued the Daily Herald alleging that the 2018 article was defamatory. The paper moved to dismiss the complaint for failure to state a claim. The District Court judge dismissed the majority of the case after finding that the article was substantially true and would not imply any new criminal misconduct on Batterman’s part to an ordinary reader. The paper then moved for summary judgment on the surviving claim of defamation that had not been dismissed. The District Court granted summary judgment finding that the paper had established that the article’s portrayal of Batterman as a bad faith financial actor was true, and, thus, by definition could not be defamatory. Batterman appealed.
In examining the record on appeal, the Court summarized the complaint by distilling the twenty-one allegedly defamatory statements identified in the complaint into four potentially actionable statements:
- implicit statements that Batterman committed criminal acts of fraud, theft, or embezzlement;
- implicit statements that Batterman committed “elder abuse”;
- explicit statements that Batterman was trustee of the Geisler Trust; and
- explicit statements that Batterman was “found guilty of wrongdoing by the SEC.”
The Court found that Batterman only took issue with the implicit statements on appeal and thus forfeited any objection to the explicit statements. The Court rejected the argument that the average reader would understand the article to imply that Batterman committed criminal acts. It refuted this by the sentence added to the updated article which added any necessary clarification.
The Court further rejected Batterman’s claims by finding that the statements in the article were substantially true and explaining that a statement is “not actionable if it is true, since truth is a complete defense.” The article stated that Batterman was accused of mishandling funds, committing wrongdoing, and putting Geisler’s money in “jeopardy,” the Court explained. These statements, the Court stated in agreement with the District Court, were fully supported by the record of the state court proceedings, including the state court judge’s finding that Batterman committed what “amounted to something of bad faith, fraud or deliberate dishonesty.”
This established, the Court explained, that the statements in the article were not only protected from liability because they were substantially true, but they were further protected from liability by Wisconsin’s judicial-proceedings privilege, which shelters a newspaper from libel actions based on “a true and fair report of any judicial … proceeding … or of any public statement, speech, argument or debate in the course of such proceeding.”
The Court’s full opinion is available online here.
Our Chicago and DuPage County breach of fiduciary duty and business litigation attorneys have defended and prosecuted breach of fiduciary duty, shareholder oppression, and business divorce lawsuits for more than three decades. With over thirty years of experience, our attorneys know how to handle claims of defamation and breaches of fiduciary duties by the executor or administrator of an estate or trust. In recognition of their stellar track record and experience, Super Lawyers named attorneys Peter Lubin and Patrick Austermuehle a Super Lawyer and Rising Star respectively in the Categories of Business Litigation, Class Action, and Consumer Rights Litigation. If you’d like to discuss how the experienced Illinois breach of fiduciary duty attorneys at Lubin Austermuehle, P.C. can help, please call us toll-free at (833) 306-4933 or contact us online.