Gounds for a Lawsuit?

[randombizguy]

It's come to my attention that one of my ex business partners (whom I recently severed business relations with by exiting the company) is being quite vocal about my departure with several of my contacts in the industry. They've personally told me what he's been saying, which includes things like the partners fired me as I was getting lazy, non performance, etc which is completely inaccurate, as I quit due to partner disagreement and signed several hundreds of thousands of dollars for the company.

We just finalized the sell of my shares back to the company and my ex partner is also telling people that they low balled me on the company valuation and laughing about it. We brought in a CBV to complete a valuation, however only used revenue up to the time of my verbal resignation. I didn't agree with this method, but really just wanted to part ways. Now I'm pretty angry that he's telling people that they basically ripped me off.

Do I have grounds for a lawsuit under character defamation and/or the release of privileged information, which he shouldn't be talking about, not to mention slandering me behind my back to people in the industry that I'm still involved in? If so, what evidence would I require to launch a suit that may stick?

I can't sit back and let him slander my reputation in an industry I've dedicated the past 9 years of my life to.

Any info appreciated prior to contact my lawyer.

[Freelancier]

Just contact your lawyer already.

My take (FWIW): Unless you can get these people who have been directly talking to your partner to testify about what he's saying about you AND that you can credibly claim that it financially hurts you, you probably don't have a good case.

[Harold Mansfield]

There are a lot of immature people in business, just like life. I was always taught no matter the circumstances that you don't speak about internal company issues with business associates. Plainly put, you don't gossip. It may appear to be entertaining, but what you are really doing is showing a lack of maturity, inexperience and professionalism.

I'd just contact a lawyer. Not sure about a lawsuit unless you have witnesses to back your claim, AND THEY WILL SAY IT IN COURT, but you may be able to get some kind of "stop talking sh*t" injunction. Not exactly sure the legal term for it, but I know it exists.

[randombizguy]

I have legal council. Problem is, it seems as though every time I talk to them I'm billed $300, hence trying to complete independent research prior to picking up the phone.

Thanks for the advice. I'll give them a call.


Just contact your lawyer already.

My take (FWIW): Unless you can get these people who have been directly talking to your partner to testify about what he's saying about you AND that you can credibly claim that it financially hurts you, you probably don't have a good case.

[Harold Mansfield]

I have legal council. Problem is, it seems as though every time I talk to them I'm billed $300, hence trying to complete independent research prior to picking up the phone.

This may be a sign that they don't seen any monetary value in the case. If so, I'd refocus your attention to the most probable outcome and that is some kind of injunction to prevent them from unfairly slandering your name in the industry.

Hopefully David will see this and chime in, as he is a Business Attorney and I'm sure he's seen it before.

I'm pretty much just guessing based on past experience, which tells me that without witnesses willing to testify on your behalf in court that they didn't do business with you because of the slander (proof that it has cost you money) , which most people aren't willing to do when the time comes, the monetary compesation case is pretty much dead and the attorney is taking advantage of your emotion to bill you as much as possible before he tells you so.

[fayt]

Slander is a big deal. Depending on the information you can dig up on it can mean if you can hold it up in court or not.

[cobase]

I have legal council. Problem is, it seems as though every time I talk to them I'm billed $300, hence trying to complete independent research prior to picking up the phone.

A lawsuit is only going to take up more time and money, and I'd be very surprised if it ends with a positive financial gain for you. Immature people are just that; they will blow off steam by being immature. The best way to keep them going on and on is to keep engaging with them -- my personal opinion is that legal action (or even threatening legal action) will only make the whole thing go on longer.

My advice would be to set up meetings with anyone important in the industry, just to give them an update on where you are and what you're looking to do now in your career. Then you can adress any comments by speaking positively of your past company and simply telling the truth about how you left the partnership. That will make your former partners look petty (which they are), and that will do much more to damage them and help you than any court ruling ever would.

[randombizguy]

Thanks all. I have a meeting with my lawyer tomorrow, who's going to provide advice as to how we should proceed at no cost. I don't feel like investing any time, energy or money in to this, so we'll see what his recommendation is. Ultimately, I'd like to have my ex partner shut his mouth instead of reap financial gain. I'm not in it for the money, but if he does indeed damage my reputation as a business professional, then this may be the only way to show them I'm serious.

I have the financial backing to do so, just don't like throwing money away unless I have a solid case and I know what I'm going up against.

I'll post an update once I have more info for others to refer to.

[Harold Mansfield]

Please do keep us posted. I'm interested in hearing how it all plays out and if there are any real world legal solutions when things like this happen to people who aren't Apple and Samsung.

[seolman]

If the majority of your friends know your ex-partner is a blowhard it's really inconsequential and most likely it will go away once the dust has settled. However, if it goes on for a long time you could ask the people you know in common if they are willing to sign an affidavit. News of your affidavit request would likely get back to your ex-partner and that may quiet things down. It's really only a concern if he is truly causing you significant financial hardship.

[randombizguy]

Talked to the lawyer. Said it would be quite hard to sue over what I heard, unless we can specifically prove that I've been hurt financially as a result and the people who he said these things to were willing to write a statement.

Looks like it would be quite hard. I'm just going to document everything from now on and if things escalate, I'll take action.

[seolman]

That's what I expected. Even if you can get people to sign a statement it would have to be something like: "I was going to do business with randombizguy until I was told [something slanderous] about him by this person." Otherwise it can be very difficult to prove financial loss just because he has said a few derogatory things about you. It's usually best to rise above it all and let the other person lower themselves to gossiping.

[huggytree]

isnt this the type of stuff you'd expect?

you were foolish settling for so little and they are braging about it.....thats life

i dont think you can do anything about it but move on

everywhere ive ever worked they bad mouthed people who were fired or quit.....if it happened to me id expect it....your not there to defend yourself and so its a 1 sided story

my advice

forget about it
become more successful than them

let your success shut them up

if you need to contact any of their customers feel free to let them know youve heard they are spreading false rumors about you, but say nothing more....dont be a 'small' person like them....be successful

you could have a lawyer write them a letter threatening something if they dont stop telling stories....i wouldnt go forward with anything more....a $200 letter may stop it all

[Paul]

Depending on the separation documents you may have a case. Most have a confidentiality clause or non defamatory clause. Find a more reasonable lawyer. A simple cease and desist letter may do the trick.

In the mean time, you may want to write a formal letter to your contacts. Not a derogatory letter, just a factual letter.
Dear Joe, this is to advise you that I am no longer affiliated with xyz company. Due to irreconcilable differences with management I have resigned and sold my equity in the company. I am now pursuing a different course…..etc etc

Even stronger may be a letter from an attorney to your contacts debunking their statements and claims.

A reputation is worth fighting for.

[randombizguy]

Depending on the separation documents you may have a case. Most have a confidentiality clause or non defamatory clause. Find a more reasonable lawyer. A simple cease and desist letter may do the trick.

In the mean time, you may want to write a formal letter to your contacts. Not a derogatory letter, just a factual letter.
Dear Joe, this is to advise you that I am no longer affiliated with xyz company. Due to irreconcilable differences with management I have resigned and sold my equity in the company. I am now pursuing a different course…..etc etc

Even stronger may be a letter from an attorney to your contacts debunking their statements and claims.

A reputation is worth fighting for.

We did sign a USA, which includes clauses pertaining to non disclosure/confidentiality, which is why I had initially contemplated a suit. Given that I'm now working for another employer and building a side business, I'd rather just fly below the radar until I get things off the ground on my own again and avoid legal action, if at all possible. The business I'll be starting is in the same industry as the last one I had been a part of and I would imagine they'll likely file a suit when they find out, but from the research I've done, I highly doubt it would stick, as I would be much different in several ways however they'll likely come after me for "confidentiality, process, know how, etc..."

I can't work for the boss. I'm not made for it :)

[dave@businessecon.org]

I've seen this before. Just be quite and go about your business. Unless there is some super secret formula here, in general nobody cares. Don't open your mouth just work; people are impressed by that aspect. The old adage, open mouth insert foot is what this is. Good luck to ya.

[kcounsel]

As someone mentioned previously, the buyout agreement should be thoroughly reviewed for any clauses related to this type of situation. Apart from the confidentiality clause, you may have a non-disparagement clause in said agreement. Contrary to contractual disparagement, defamation as a tort is applied very rigidly. Disparagement as a breach of contract is arguably a legal gray area, and a liquidated damage provision may help determine whether bringing an action would be worthwhile.

Best of luck!

[Business Attorney]

Disparagement as a breach of contract is arguably a legal gray area, and a liquidated damage provision may help determine whether bringing an action would be worthwhile.

As noted a few months ago, to make a suit worthwhile, you have to be able to prove economic loss. It's true that a liquidated damages provision replaces the need to prove actual damages, assuming the liquidated damages are not viewed by the court as a penalty rather than a substitute for expected actual loss. The problem is that in more than 35 years of practicing business law. I don't think that I have ever seen a liquidated damages provision for disparagement, so I am probably safe in guessing that there is no provision in your sale agreement establishing a liquidated damages amount for disparagement.

Proving financial loss for disparagement is very tough. You might get them to stop simply by bringing the lawsuit, or even by just letting them know you are ready, willing and able to bring the suit, because they might prefer to shut their mouths rather than spend money on the lawsuit, but in the end it is likely that the costs of pursuing the disparagement claim will come directly out of your pocket and not be recouped from a damage award at the end of the day.

Your lawyer is in the best position to assess the facts and advise you on the pros and cons of pursuing your claim. I recommend that you give considerable weight to his advice.

[kcounsel]

As noted a few months ago, to make a suit worthwhile, you have to be able to prove economic loss. It's true that a liquidated damages provision replaces the need to prove actual damages, assuming the liquidated damages are not viewed by the court as a penalty rather than a substitute for expected actual loss. The problem is that in more than 35 years of practicing business law. I don't think that I have ever seen a liquidated damages provision for disparagement, so I am probably safe in guessing that there is no provision in your sale agreement establishing a liquidated damages amount for disparagement.

Proving financial loss for disparagement is very tough. You might get them to stop simply by bringing the lawsuit, or even by just letting them know you are ready, willing and able to bring the suit, because they might prefer to shut their mouths rather than spend money on the lawsuit, but in the end it is likely that the costs of pursuing the disparagement claim will come directly out of your pocket and not be recouped from a damage award at the end of the day.

Your lawyer is in the best position to assess the facts and advise you on the pros and cons of pursuing your claim. I recommend that you give considerable weight to his advice.

I concur with that assessment.