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Wilkow v. Forbes, Inc., et al.

United States Court of Appeals For the Seventh Circuit
241 F.3d 552 (2001)
ELI5:

Rule of Law:

Under Illinois law, statements that are expressions of subjective opinion, interpretation, or theory regarding a person's business ethics or court-approved legal strategies, rather than claims of objectively verifiable fact, are not actionable as defamation. Harsh characterizations and colloquialisms are generally considered non-defamatory opinion when read in the context of commentary on public legal proceedings.


Facts:

  • Marc Wilkow was the leader of a real estate partnership, 203 North LaSalle Street Partnership, which had a $93 million non-recourse loan from Bank of America for a Chicago office building.
  • By the mid-1990s, the partnership's rental income was insufficient to cover its costs and debt service.
  • When the loan's principal came due in January 1995, the partnership could not pay and filed for bankruptcy to prevent the bank from foreclosing on the property.
  • In the bankruptcy case, Wilkow's partnership proposed a reorganization plan using the 'new-value exception,' which allowed the partners to retain ownership by contributing new capital, even though the bank would be repaid only $55 million of its $93 million loan.
  • Brigid McMenamin wrote an article for Forbes magazine criticizing the court's approval of the partnership's plan.
  • The article described Wilkow's partnership as having 'stiffed' the bank and characterized the situation as 'unscrupulous business owners... rob[bing] creditors.'
  • The article also stated that 'Wilkow and his partners pleaded poverty' when the loan came due.

Procedural Posture:

  • Marc Wilkow filed a libel suit against Forbes, Inc. and author Brigid McMenamin in the U.S. District Court for the Northern District of Illinois, based on diversity jurisdiction.
  • The defendants filed a motion to dismiss the complaint for failure to state a claim under Fed. R. Civ. P. 12(b)(6).
  • The district court granted the motion to dismiss, ruling that the article was a privileged report of a judicial proceeding and that the challenged statements were protected opinions.
  • Wilkow, as the appellant, appealed the district court's dismissal to the U.S. Court of Appeals for the Seventh Circuit.

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Issue:

Does a magazine article that uses terms like 'stiffed,' 'rob,' and 'pleaded poverty' to describe a businessman's court-approved actions in a bankruptcy proceeding constitute actionable defamation under Illinois law?


Opinions:

Majority - Easterbrook, Circuit Judge

No. The magazine article is not defamatory under Illinois law because the challenged statements are non-actionable expressions of subjective opinion and interpretation rather than objectively verifiable false statements of fact. Illinois law distinguishes between statements of fact and subjective views, with only the former being actionable. The terms 'stiffing' and 'rob' are the author's characterizations and opinions on the business ethics of using a court-approved bankruptcy strategy; they do not imply illegal conduct, especially since the article notes the plan was court-approved. The phrase 'pleaded poverty,' when read in the context of a bankruptcy filing, is a colloquialism for the partnership's inability to pay its debts, not a false claim that Wilkow was personally destitute. An author's opinion about business ethics, even if dripping with disapproval, is not defamatory, and allegations of greed or 'sharp dealing' are considered protected opinion under Illinois law.



Analysis:

This decision reinforces the high barrier for defamation claims involving commentary on public legal and financial matters, particularly under Illinois law. It clarifies that forceful, colorful, and biased language used to characterize a business strategy is protected as opinion, provided it doesn't imply the existence of undisclosed, defamatory facts. The ruling gives journalists significant leeway to express strong, critical viewpoints on controversial business and legal tactics. This precedent emphasizes that context is crucial in distinguishing protected opinion from actionable defamation, thereby protecting vigorous public debate on economic issues.

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