The Illinois Supreme Court has unanimously affirmed a lower court’s ruling that a company can sue for defamation over emails sent to executive leadership but not otherwise made public.
The long running dispute pits Chicago-based shipping logistics competitors FourKites and project44 and stems from emails sent to a project44 executive and two board members alleging “rampant accounting improprieties,” Mafia connections and faulty products, while also invoking Ponzi schemes and the Theranos scandal.
According to court records, though the emails appeared to originate with people who had project44 ties, they were linked to Gmail accounts and ultimately connected to people associated with FourKites. Ultimately, project44 sued FourKites and individual anonymous defendants, alleging defamation and conspiracy.
A Cook County judge dismissed the complaint, finding there was no disclosure to an external party as required to mount a defamation lawsuit, although agreeing the challenged statements were otherwise actionable and could be judged defamatory. A state appeals panel reversed that ruling, finding project44 adequately alleged “publication.”
Justice Lisa Holder White wrote the opinion on FourKites’ appeal, filed in late March.
FourKites argued the only recipients of the emails were members of executive leadership — “the human embodiment” of the company — but project44 maintained its position that a corporation has a legal right to protect its reputation and that the allegations in the email were intended to defame the company. Holder White noted FourKites didn’t challenge the circuit court determination regarding the statements as actionable, as they alleged criminal conduct or a lack of professional integrity.
“FourKites likens the leadership-level employees of a corporation to puppeteers and the corporation their puppet,” Holder White wrote. “Under such a relationship, a statement to the puppeteer is a statement to the puppet.”
While the Supreme Court acknowledged other states have issued rulings following FourKites' argument, the justices agreed with the appellate panel’s assertion that “Illinois courts have recognized that an employee of a corporation can be a third party for purposes of finding a defamatory statement was published.” Among those examples are interoffice reports and other communications that don’t constitute “the corporation talking to itself.”
Although the circumstances of this lawsuit involve outside communication, Holder White explained, that case law is instructive for how it addresses relationships between corporations and executives.
“Management-level employees have their own separate interests from the corporation as to be third parties for purposes of the publication in intracorporate communication cases,” Holder White wrote. “This rationale applies equally when communications are sent to managerial employees from a party outside the corporation.”
The court further noted project44’s defamation allegations don’t hinge on what effect the emails might’ve had on its business but only whether the statements themselves were defamatory. It also said FourKites incorrectly framed the appellate panel’s position on qualified privilege, explaining the ruling didn’t negate that as a possible defense but noting such privilege only applies after a plaintiff establishes defamation elements, which makes applying that defense premature.
The Supreme Court affirmed the appellate court’s reversal of the circuit judge’s finding, as well as its remand of the complaint back to circuit court for further proceedings.
FourKites is defended by attorneys Scott Gilbert and Adam Weiss, of the Chicago firm of Polsinelli.
FourKites did not respond to a request for comment.
Project44, represented by attorneys Douglas Albritton and Peter Hawkins, of Actuate Law, of Chicago, issued a statement on the ruling:
“The Supreme Court agreed and clearly understood the harm such defamatory content can cause even when sent just to an organization’s own leadership team and board members,” said project44 General Counsel Jennifer Coyne in the prepared statement. “This decision holds competitors accountable for attempted sabotage by anonymously sending harmful falsehoods to corporate decisionmakers.”