Legal News

In Light of Bove Suit, Talkin? Defamation with Gibson Dunn?s Ted Boutrous

By Ashby Jones

As many of you may have seen by now, earlier today BankAtlantic Bancorp filed a lawsuit against well-known Ladenburg Thalmann analyst Richard Bove and his firm seeking damages for defamation stemming from a widely distributed report entitled “Who Is Next?” following the collapse of IndyMac Bancorp Inc. The suit was filed in state court in Broward County, Fla. Click here for the Dow Jones story; here for the press release issued by BankAtlantic.

BankAtlantic shares lost a third of their value on July 14 after Bove included the Florida bank in his report, though the shares bounced back after the company put out a press release saying it remained well-capitalized.

BankAtlantic asserted Bove and Ladenburg used faulty methodologies to determine whether a bank or thrift was in or near “the danger zone.” BankAtlantic said its two holding companies contain other assets and business lines that made the comparison “nonsensical” and “the impression it created foreseeable.”

Bove was not immediately available for comment.

So what to make of the defamation lawsuit? We checked in media lawyer with Ted Boutrous of Gibson, Dunn & Crutcher out in Los Angeles, who handles libel and defamation claims from time to time, albeit mostly from the defense side. Boutrous declined to address the lawsuit specifically, but said that defamation suits are fairly hard for plaintiffs to win, for several reasons. First, proving the statement was “false” can be hard. Second, it could be argued that BankAtlantic, as a public company, is also a public figure. To prove defamation, says Boutrous, a public figure has to show that the plaintiff exhibited “actual malice” in making his statement. Finally, proving damages in situations like this can be difficult, especially if and when the stock goes back up.

“Litigation is costly, it’s invasive and the burden is on the plaintiff to prove the truth,” says Boutrous. “It’s hard to win a case like this.”

So what would Boutrous recommend to a client that feels it’s been defamed or libeled? “Well, I tend to recommend aggressive counter-action through getting the true facts into the open as soon as possible. Getting your side of the story out into the public is the best way to counter potentially inaccurate information,” he says. “And, to the extent you can go to the person you claim made inaccurate statements and give that person the correct information and get them to put the truth out there, that’s even better.”

Full post as published by Law Blog - WSJ.com on July 21, 2008 (boomark / email).