A federal court judge denied a fledgling electronic logging device company’s argument that posting statements alleging a famous competitor was going bankrupt didn’t constitute defamation.
Judge Harry Leinenweber for the U.S. District Court for the Northern District of Illinois denied One20’s motion to dismiss Rand McNally’s defamation lawsuit regarding the claims of bankruptcy but granted the motion to dismiss in regards to One20’s remaining advertisements.
Rand McNally, a 161-year-old business based in Skokie, Ill., filed a lawsuit in February that accused One20 of orchestrating “fake” Twitter accounts to make customers believe the longtime company was going bankrupt. The two companies are competitors in the heavy-duty trucking market as they both provide GPS navigation and ELDs. The lawsuit also specifically names One20 President and CEO Christian Schenk.
One20, which is based in Minneapolis, began an advertising campaign for its “Trade-Up Program” in January. Under this program, a truck driver who bought one of One20’s tablets and turned in his old Rand McNally device would receive a $100 Visa gift card.
Some of the advertisements posted on the One20 website included a photo of a Rand McNally device with the header “Is your nav provider going bankrupt? Don’t get stuck without a warranty!”
“The gist of the statements in (multiple exhibits) is that Rand McNally is going bankrupt and that its customers will be stuck with products without warranties,” the court wrote.
Rand McNally also accused One20 of orchestrating “fake” Twitter accounts as part of the campaign. Rand McNally referenced the Twitter accounts @robslands and @richjohnson29. Both accounts claim to be controlled by people involved in the trucking industry, and both posted comments about Rand McNally.
“Fellow #Truckers: Return those @randmcnally tablets before it’s too late. Bankruptcy is now so close!” the @robslands account posted on Jan. 17.
In the lawsuit, Rand McNally noted that both of those Twitter accounts weren’t controlled by the people whose names were associated with the account.
One20 argued that the statements highlighted in Rand McNally’s complaint didn’t meet the requirements of defamation per se. Specifically, One20 cited a pair of cases that ruled “a false accusation of bankruptcy is not so obviously and materially harmful to a plaintiff that (its) injury may be presumed.”
Judge Leinenweber contended that One20’s cited cases didn’t entirely apply.
“As Rand McNally argues, the suggestion of bankruptcy and the suggestion of the inability of Rand McNally to honor its warranties go directly to its ability to remain in business and continue to provide services and products to its customers,” the court wrote. “Thus, it is clear that the suggestions of bankruptcy are defamation per se as they go directly to impugn its business reputation.”
However, the court ruled to throw out the remaining advertisements that mentioned Rand McNally but didn’t say the company was going bankrupt. The remaining advertisements focused on Lynn Tilton, CEO of Patriarch Partners LLC, New York, which owns Rand McNally, or referred to the Rand McNally product as being “old” or “outdated.”
“The connection between Patriarch Partners, Tilton, and Rand McNally are extrinsic facts that are necessary to understand the significance of these advertisements,” the court wrote. “Thus, they are not defamatory per se.
“The remaining advertisements that refer to One20 as having “your best interests in mind” and to the Rand McNally product as “outdated,” “junk” and “can’t connect to favorite apps” are mere statements of opinion and rhetorical hyperbole protected by the First Amendment.
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