For several years, a contentious finance defamation lawsuit has been darting its way around New Jersey’s justice system. But a recent ruling may have brought the matter to a close, and it looks like the plaintiffs will walk away with a cool $40 million.
Finance Defamation Case Study: Who Sued Who?
A New Jersey-based hedge fund sued an investigative firm that (according to its website) helps “thousands of companies and investors around the world conduct thorough background investigations on high-level individuals as well as their companies or funds.”
Apparently, one of the firm’s reports — which was available to potential investors between 2002 and 2006 — didn’t highlight the hedge fund’s principals in the best light, accusing them of misconduct and incompetence at a previous employer.
Courts Disagree About Damages
The case’s original jury awarded the fund millions in damages, but an appeals court overturned the decision on a legal technicality. Why? Well, in the original case, the jury awarded both nominal and actual damages, which didn’t make logical sense. Since, the jury recognized that the fund suffered material, financial setbacks because of the report (actual damages), awarding nominal damages (or “hypothetical damages”) didn’t cut legal muster.
So, in early fall 2016, the parties returned to court; lawyers once again laid out their arguments to a new jury; and ultimately the plaintiffs were granted actual, punitive, and general damages amounting to about $40 million.
Finance defamation attorney Daniel Warner (who is not connected to the case) speculated that the defendants may file another appeal, but pointed out that “this case demonstrates juries’ willingness to grant large damage awards to truly defamed parties. A lot of people still mistakenly believe that free speech means anyone can say anything they want. It doesn’t. There are limits to speech, and lying about a person’s professional integrity is one of them.”