BANGOR, Maine — The author of a monthly paper industry newsletter contended Wednesday that his First Amendment right to free speech protects him from a defamation lawsuit filed by former East Millinocket mill manager Cate Street Capital.
The lawsuit focuses on four passages from a highly critical article titled “The Maine Problem,” which author and paper industry veteran Verle Sutton’s company Industry Intelligence LLC published in May 2014 in the newsletter The Reel Time Report.
In U.S. District Court in Bangor, both sides argued Wednesday before Magistrate Judge John Nivison about whether those statements are protected under the First Amendment of the U.S. Constitution.
Sutton’s attorneys are seeking to have the lawsuit dismissed on those grounds, arguing that one of the passages is close enough to the truth — or “substantially true” — to qualify for First Amendment protection and that three others are expressions of opinion.
Attorneys for Cate Street have argued that the May 2014 article harmed the company’s reputation and affected its ability to conduct its business in Maine.
The East Millinocket mill Cate Street managed shut down in January 2014 and the corporate entity that owned the mill, GNP Maine Holdings, ultimately filed for bankruptcy in September 2014.
On Wednesday, both parties argued not over whether there was harm to the business operations or the extent of any harm, but rather whether Sutton’s article was protected speech.
One of the statements was based on Sutton’s characterization of a $1 million personal judgment against Cate Street CEO John Halle in a New York court. Sutton used the word “convicted” to describe the charges, which has a legal meaning specific to criminal court cases brought by an agent of federal or state government.
The judgment against Halle was in a civil trial, but Sutton’s attorney, Bernard Kubetz — who also represents the Bangor Daily News on legal matters unrelated to this case — argued use of the word “conviction” does not have special significance for laypeople who read the article and that the statement was “substantially true.”
“I think the gist of the statement and the sting of the statement is essentially the same whether Mr. Sutton had used the word ‘convicted’ or ‘found liable’ or ‘found legally responsible,’” Kubetz said Wednesday.
Sutton and Industry Intelligence’s other attorney, Neil Shapiro, argued that three of the other passages in question constituted expressions of opinion or speculation about Cate Street’s management of the mill and not assertion of facts about the mill’s operation.
Brian Champion, the attorney for Cate Street, said the statements together imply to a reader that Sutton had specific knowledge of some underlying deception at Cate Street Capital that can be proven or disproven.
“There is an implication of the existence of facts that can be proven, that is actionable,” Champion said.
The case now rests with Nivison, who will decide whether to dismiss the defamation claims or advance them, which would involve both parties conducting discovery and arguing over whether the statements were actually true or false and the extent of any financial harms to which the statements could be linked.