Important Victory Against An Oil Company's Censorious SLAPP Suit In Colorado

Popehat 2018-08-02

More than a year ago I wrote about how an oil company called SG Interests was harassing a citizen activist for talking about their settlement of an antitrust case. The United States Department of Justice accused SG Interests of bid rigging, and SG Interests settled the case for $275,000. Years later, when SG Interests was involved in a local dispute, Peter Kolbenschlag wrote a Facebook case characterizing that as SG Interests being "fined," linking the Justice Department's press release describing the settlement. SG Interests sued him for libel, arguing that they had paid a settlement, not a fine. As I wrote then, this is a classic SLAPP case — a big company trying to silence a lone critic with heavy-handed meritless litigation.

After prolonged and expensive procedural maneuvering — I'll spare you the details — Kolbenschlag has now won. A Colorado state judge has issued an order granting summary judgment to Kolbenschlag. The Court agreed that describing the settlement as a "fine" fell into what's called the "substantial truth doctrine." That's the notion that even if not every word of a statement is literally correct, if it is materially true — that is, if the important facts that determine how the audience views it are true — then it's true for purposes of defamation law, and not defamatory. That doctrine is crucial because it protects speakers from suits just like this one, where the plaintiff argues that some detail of a statement was technically wrong even if its thrust is completely true and the detail makes no difference in how the audience understands it. Here's the way the judge put it:

The Court agrees with the Defendant. First, the Court finds that the use of the word "fined" by the Defendant in his comment did not render that statement false. The term "fine" is commonly defined as "a sum imposed as punishment for an offense" or "a forfeiture or penalty paid to an injured party in a civil action." See Merriam-Webster.com (2018). In this case, SGI ultimately paid a sum to the federal government to resolve claims brought against it that alleged anti-trust violations under the Sherman Act. SGI also paid a separate sum of money to settle the related qui tam action brought by the former GEC insider alleging false certification. The Court does not believe that the terminology used to describe those payments – whether they are called fines, penalties, settlement payments or damages – makes any real difference. Under Colorado law, the Court must evaluate the challenged statement in the light of an ordinary reader. Frye v. Lee, 408 P.3d at 849. The Court is aware that SGI settled the cases by paying a specific sum without admitting liability. That is a common practice by companies for a variety of reasons. The Court just does not find that the distinction between paying a settlement and paying a fine is of a sufficient difference to the average reader to support a defamation action on those grounds.

The judge also pointed out that multiple press accounts at the time of the settlement characterized it as a "fine." SG Interests didn't sue them, probably because they had assets to protect themselves. It sued a lone citizen talking on Facebook. The Court noted dryly "the Court fails to see how SGI could now argue that the average reader would consider the difference between a "fine" and a "payment in settlement" to be particularly meaningful when the reporters, industry insiders, and legal commentators in the field disregarded that very same distinction at the time of the underlying events." Finally, the Court noted that Mr. Kolbenschlag linked the Justice Department press release about the settlement he was describing, demonstrating he wasn't trying to mislead his audience.

Steven D. Zansberg of Ballard Spahr LLP did an exceptional job against a formidable foe and won this for Mr. Kolbenschlag. Your free speech rights, and mine, rely on the efforts of lawyers like him. SG Interests acted like a censorious thug and ought to be condemned widely for it. And though I celebrate the American system in which everyone may hire counsel to represent them, I have a very dim view of attorneys who pursue so clearly meritless and censorious cases as this, like SG Interests' lawyer William Zimsky. But I guess someone has to represent rich people trying to abuse the justice system to silence poor people.