• February 8, 2016
William Holman Hunt, The Scapegoat (1854)

William Holman Hunt, The Scapegoat (1854)

Update (February 8, 2016): If a company says that “Jane Doe has left the company and now we have hired someone for her position who will further enhance a culture of legal compliance at the company,” has the company defamed Doe?

The statement says nothing false about Ms. Doe but isn’t there at least a hint, a trace, whiff, inkling, and an insinuation that the company felt that Doe’s conduct fell a little short in terms of “enhancing a culture of legal compliance”? 

And what if Jane Doe quit the company and her replacement was hired over a year later? Doesn’t that make the company announcement misleading, at best?

Enter the doctrine of “defamation by implication.”

Sweet vindication for Plaintiff (and Minnesota lawyer, F. Chet Taylor) in the case discussed below in the form of a recent $600,000 jury verdict in his favor on a claim for defamation by implication. The case was before Hennepin County Judge James Moore. Victorious plaintiff’s counsel were Kevin Hofman and Ryan Wahlund. Counsel for defendant Feltl were David Marshall and Leah Janus.

Regular Minnesota Litigator readers know that I am preoccupied by the extremely complex phenomenon of “reputation” among lawyers and here, of course, we have many la(w)yers to ponder. In reviewing documents related to this case, can we draw any inferences at all about Mr. Taylor? About the winning lawyers, Hofman/Wahlund? About the losing lawyers, Marshall/Janus?

Data scientists have a term: Noisy data. Noisy data is meaningless data. The term has often been used as a synonym for corrupt data. However, its meaning has expanded to include any data that cannot be understood and interpreted correctly by machines, such as unstructured text. The fact is that assessing lawyer competence and integrity accurately in our chattering professional world is monumentally challenging. Impugning the reputation of a lawyer unfairly can impose terrible harm and should expose trash-talkers to significant financial risk.

Original post (dated October 8, 2014) (under headline:Taylor v. Feltl Co., Defamation, Scape-Goating, “Cleaning House,” & The Digital Age): Neal St. Anthony of the Star Tribune brought our attention to this story in the Star Tribune last week.

Earlier this year, Feltl & Company, Inc. got into hot water with FINRA, the Financial Industry Regulatory Authority over Feltl’s failure to comply with FINRA penny stock rules.

Feltl issued a “corrective action statement,” including the statement:

[T]he firm has replaced the General Counsel, Chief Compliance Officer, Head Trader and a Branch Manager from the relevant period. The current Feltl employees occupying these positions will further enhance a culture of compliance at the firm.

Any honest person would read this statement to suggest that Feltl’s General Counsel, Chief Compliance Officer, Head Trader and a Branch Manager “from the relevant period” failed to “enhance a culture of compliance at the firm.”

This has hurt or will hurt these individuals’ professional reputations. What can they do about it?

This is not an easy question. First, it is not a tort to hurt someone’s reputation, of course. The injured person has to prove the statement is false. The text, above, might seem to tarnish the reputations of the General Counsel, Chief Compliance Officer, Head Trader and a Branch Manager “from the relevant period” indirectly, if at all. It could be difficult to prove this statement to be “false.”

(On the other hand, former Feltl general counsel Chet Taylor’s complaint suggests that Feltl said or implied that it “replaced its general counsel as a result of the FINRA investigation,” when, in fact Taylor left of his own accord, after trying to leave for nearly a year. This might make for a more easily falsifiable and actionable defamation claim if it is actually false.)

Still further, how is one to prove damages? This can be extremely difficult. Minnesotan lore is that Minnesotans are tight-lipped, circumspect, and introverted. Some call it “passive aggressive.” I am in no position to validate or contradict this idea. But, as far as I am concerned, people everywhere, when they shun or avoid someone, do not go out of their way to explain why they are doing so to very many people, much less to the very people on their sh*tlist.

Finally, whether to sue for defamation is a hard decision because repeating damaging statements about oneself poses the risk of exacerbating rather than vindicating the harm.

Should one sit on one’s hands and allow one’s reputation to be tarnished? This dilemma is all the more critical in this digital age where statements can adhere to one’s name, to one’s identity, to one’s reputation indefinitely, forever stuck in the internet web of misinformation.

Without taking a position on the merits of the specific claims and defenses in the lawsuit of F. Chet Taylor v. Feltl Company, Inc., it does seem to me that Twin Cities attorney, F. Chet Taylor, might have a reasonable approach.

Draft a careful, comprehensive complaint setting out your side of the story. Once that is done, maybe some blogger somewhere will post it on-line and perhaps this could be part of the process of getting out your side of the story…

(The case has been filed and is before a new Hennepin County Judge, James Moore (Court File No. 27-cv-14-16399.)

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