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You are a high-level corporate executive. It is a quiet morning, and you contentedly sip coffee while perusing a major business news magazine. Suddenly, you stop cold: An article reports on a high profile litigation your company is involved in. More to the point, the writer is highly critical of your corporation and its legal tactics. Quite naturally, you’re infuriated by what you deem to be scandalous treatment at the hands of some outsider sniping from the sidelines. “I’ll sue,” you shout, and hit the speed dial for your outside law firm. But hold on a minute — notwithstanding your righteous indignation, notwithstanding the unfairness of this “news” report, do you actually have a basis for litigation? The unfortunate answer for Corporate America is most likely not. The lack of a viable cause of action for redressing criticisms made of your business in a news article was brought home recently in the 7th U.S. Circuit Court of Appeal’s case, Wilkow v. Forbes Inc., 241 F.3d 552 (7th Cir. 2001). There, one of the nation’s leading appellate tribunals held that a businessman could not maintain a defamation action against a national business journal, no matter how offended he was by the writer’s scathing criticism of his actions in a landmark bankruptcy case. Those comments, barbed as they were, were still only opinions, said the court, and therefore not actionable. Given the understandable concern of corporations with unfavorable publicity, the limits of action set down in this case are worthy of discussion. To understand Wilkowfully, one must first understand both the article in question and the litigation that spawned the writer’s interest in the first instance. First, the litigation. In 1999, the U.S. Supreme Court issued a landmark decision on bankruptcy law in Bank of America National Trust & Savings Ass’n v. 203 North LaSalle Street Partnership, 526 U.S. 434 (1999). The controversial issue there was whether the so-called “new value” rule survives under the modern Bankruptcy Code. The new value rule permits equity owners to retain their interest in a reorganizing debtor, provided they inject “new value” into the entity as part of its plan of reorganization. What has made the new value rule so controversial is that it overcomes the normal practice, called the “absolute priority” rule, which provides, among other things, that equity is wiped out unless all senior creditors are paid in full. Needless to add, senior lenders often feel cheated in large Chapter 11 cases when equity is permitted to retain its interest even though creditors are left unpaid. At the end of the day, the Supreme Court’s decision in LaSallewas largely inconclusive as to whether the new value rule endures, but that’s beside the point. What is imperative is the article that appeared in Forbesmagazine some seven months before the justices issued their fragmented decision. The article was, to say the least, a strongly worded piece. It was highly critical of the debtor, LaSalle, and its tactics in the Chapter 11 and the ensuing appeals. From the outset, the writer declared that courts had become too debtor-friendly, permitting borrowers to “stiff” banks by repaying only pennies on the dollar in reorganization plans. Specifically, addressing the LaSallecase (then awaiting the hearing before the Supreme Court), the article characterized Marc Wilkow and his partners in LaSalle, a real estate partnership, of “plead[ing] poverty” when the debtor could not repay the $93 million mortgage loan it owed to Bank of America. To stave off foreclosure, LaSalle filed for bankruptcy, and pushed to keep ownership of its real property. The article then continued in a critical vein, deriding the bankruptcy court’s approval of the debtor’s plan, calling it a nice deal for Wilkow and friends to keep the building while the bank was forced to relinquish 40 percent of its claim. Make no mistake, the innate cynicism of the article cast the debtor in a decidedly negative light. But probably harshest of all was the title of the article: “Stiffing the Creditor” was the bold headline in Forbes. SeeMcMenamin, “Stiffing the Creditor,” Forbes, Oct. 5, 1998, at p. 57. I remember the article well, and have employed it frequently in bankruptcy law seminars. Remarkable was the stinging commentary in Forbes, and how that well-established business journal pulled no punches in pummeling not only Wilkow and company, but also debtors and the courts in general. Apparently others with a personal interest decided to take Forbeson. Hence, the instant case. Wilkow, alleging both his business and he personally were wrongly disparaged by the Forbesarticle, filed a defamation suit in an Illinois federal court. The trial court dismissed the action at an early stage for failure to state a claim, and his appeal followed. Circuit Judge Frank Easterbrook began the court’s analysis by reviewing the Supreme Court’s decision in LaSalle, and, moreover, its prior history. In a touch of fitting irony, LaSallebegan its life in a Chicago federal bankruptcy court and had been decided by this same 7th Circuit before the High Court granted review. Notably, opined Judge Easterbrook, the Supreme Court required about 8,000 words to decide LaSalle(in his own pointed barb, this appeals judge asserted the High Court’s opinion left more questions than it answered), while the 7th Circuit’s prior decision ran about 9,500 words for the majority opinion, with over 5,000 words written in the circuit dissent. Implicitly, the over 20,000 words required for the nation’s highest court and one of its most esteemed appellate tribunals to decide LaSallebelied its complexity. In sharp counterpoise, the Forbespiece was less than 700 words. Thus, it “could not present either the facts of the case or the subtleties of the law.” Yet, observed the tribunal, what Forbeslacked in substance it more than made up for in “colorful verbs and adjectives,” especially those excorticating the debtor, Wilkow, and the bankruptcy process. Case in point, the charge that “many judges, ever more sympathetic to debtors, are allowing unscrupulous business owners to rob creditors.” Those fighting words, combined with the other assertions about Wilkow “pleading poverty,” were what incited his libel suit. Yet could his claim survive? To be sure, the 7th Circuit first noted, under Illinois law a statement of fact prefaced by a disclaimer that it is opinion is not shielded from a defamation action. On the other hand, state law provides that if the speaker is plainly expressing a subjective view, an interpretation, a theory, conjecture or surmise (as opposed to a claim of stating objective, verifiable fact), there is no defamation. Did the Forbesarticle fall on that side of the line? Clearly so, opined the tribunal. The writer’s characterizations about stiffing or robbing creditors conveyed an opinionated objection to the continuance of the new value rule. Decrying judicial acquiescence to debtors’ exploitation of such legal avenues was an expression of a point of view. Importantly, the Forbesarticle did not even imply that Wilkow did anything illegal. Moreover, the more factual portions of the article simply in-formed the reader of various court decisions, and were taken from public records. Nary a hint of misconduct by Wilkow appeared in the piece. The 7th Circuit found that “[c]olloquialisms such as ‘pleaded poverty’ did not defame Wilkow by implying he was impoverished or a deadbeat. Indeed, filing for bankruptcy, as LaSalle did here, is in fact an acceptable way of pleading poverty,” said Judge Easterbrook. To be sure, “the [ Forbes] article drips with disapproval” of Wilkow and the lower courts. Yet an opinion about someone’s business ethics is not defamatory under Illinois law. “A reporter is entitled to state her view that an ethical entrepreneur” would have not sought court approval to nearly halve the bank’s secured claim. Certainly, a reader “might arch an eyebrow” at the debtor’s new value strategy, opined the tribunal. Nonetheless, held the appeals court, “an allegation of greed is not defamatory.” Reflecting the free market school of thought he is a famous proponent of, Judge Easterbrook opined that self-interest is the engine of capitalism, and while the success of a free market does not depend on questionable business practices, “an allegation of sharp dealing” is nothing more than “an uncharitable opinion.” And the current law of defamation does not attach damages to simple “name-calling.” Ironically, observed the court, some may have read the Forbesarticle and formed a higher opinion of Wilkow as a savvy businessman who used every legal avenue available to drive the best bargain for him and his partners. Yet no matter the net effect, the 7th Circuit declared the Forbesarticle was not defamatory. Wilkow’s case was again dismissed, and he was left to vent his anger against the magazine elsewhere. For the occupants of the corporate suite, the Wilkowdecision might be viewed as disquieting. While libel law varies from state to state, the general proposition of this case holds broad application. Briefly, merely disclaiming malicious comments as simply opinion does not wash. A writer engaging in such practices cannot hide behind the facade of legitimate opinion. This is the good news. On the other hand, where the context of the statements makes it clear they are subjective, interpretative, theoretical or in any other way not factual in nature, there is little the offended party can do. The marvel of free speech still thankfully prevails in this country. Clearly, under Wilkow, a writer is free to be strongly opinionated, even to the point of offending someone without fear of legal repercussions. The 7th Circuit made clear that “uncharitable” comments, “name calling” and the like are not actionable as defamation. Interestingly, the tribunal made a point that the Forbesarticle here was grounded on supportable, factual reporting, accurately reflecting real events and truthfully replicating public documents. Implicitly, did this save the writer in Wilkow? Quite possibly, for had that writer not counterbalanced her vigorous opinions with such indisputable recitation of facts, the result might have been different. No one likes to see their business (or themselves, for that matter) held out for public criticism. But what can you do about it? Very little, Wilkowtells us, no matter how inflammatory that critique may be. Opinion is, after all, opinion, and in America everyone is entitled to one. Recourse in a defamation suit can only survive if there is more than mere opinion alleged. Possibly the best defense lies in the simple expedient of conducting one’s business in as honest a manner as possible. Anthony Michael Sabino teaches law at St. John’s University, Tobin College of Business. Mary Jane C. Sabino is a partner in Sabino & Sabino, P.C., Mineola, N.Y.

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