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Judge Tosses Former Marsh & McLennan Executive's Defamation Suit Against Spitzer

Source: A.M. Best

Posted on 03 Oct 2012 by Neilson

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Eliot Spitzer suitA federal judge in Manhattan has thrown out a former Marsh & McLennan executive's $60 million defamation lawsuit against former New York Gov. Eliot Spitzer and the online magazine Slate, deciding that a 2010 column written by Spitzer was protected on First Amendment grounds.

Judge Paul Oetken of the U.S. District Court for the Southern District of New York wrote in an Oct. 1 opinion dismissing the case that the allegedly defamatory statements in Spitzer's column on could not be read as specifically targeting the plaintiff in the suit, thus failing to meet the legal standard for defamation cases.

William Gilman, a former executive marketing director at Marsh & McLennan Cos. Inc., filed the defamation suit in August 2011, alleging Spitzer and Slate improperly tarred him as one of "many employees of Marsh" who were convicted and sentenced to jail terms for illegal misconduct.

Gilman said as a result of Spitzer's column, he suffered "injuries in his trade, business and profession." Gilman also accused Spitzer and Slate of publishing the column with a "reckless disregard for the truth" because he was ultimately cleared of the allegations against him.

In the column, Spitzer blasted Marsh and a group of its former employees for engaging in what Spitzer described as "a blatant abuse of law and market power: price-fixing, bid-rigging, and kickbacks all designed to harm their customers and the market while Marsh and its employees pocketed the increased fees and kickbacks."

Despite that fiery description of the alleged misconduct, Oetken wrote that "as a matter of grammar and logic" a reader could not reasonably determine Gilman was one of the "many employees of Marsh" Spitzer's column criticized.

"In other words, no reasonable reader of the entire passage would come away from it thinking both that Gilman obtained dismissal of the charges against him and that Gilman was convicted and jailed on those charges," Oetken said.

At its core, the dispute between Spitzer and Gilman stems from a 2004 investigation into Marsh and several of its employees that Spitzer led while serving as New York's attorney general. The investigation centered upon Marsh's use of "contingent commissions" or fees insurers paid to brokers who brought them business. Spitzer accused Marsh of using contingent commissions in a "bid-rigging scheme" designed to illegally suppress competition.

Marsh ultimately settled with Spitzer's office in 2005 by agreeing to place $850 million into a fund that would pay Marsh customers who paid the commissions.

But it was the subsequent criminal investigation into individual Marsh employees that set the stage for Gilman's defamation complaint.

In September 2005, Spitzer indicted Gilman and seven other Marsh employees on 37 criminal counts related to Marsh's use of contingent commissions. After most of those charges were thrown out, Gilman was convicted on one count of restraint of trade and competition and was sentenced to 16 weekends of incarceration.

However, Gilman's conviction was vacated after a trial judge found that Spitzer's office failed to provide Gilman's defense team with some 700,000 documents that could have changed the outcome of the case.

Five years later, The Wall Street Journal published an editorial taking Spitzer to task for an overly aggressive approach to prosecuting American International Group Inc. and its former chairman, Maurice "Hank" Greenberg. As an aside, the editorial cited the botched criminal case against Gilman and another Marsh employee as an example of Spitzer's prosecutorial style.

The Journal's editorial did not mention Gilman by name.

Spitzer fired back in a column of his own that also did not mention Gilman by name, instead referring to "the many employees of Marsh who have been convicted and sentenced to jail terms."

Oetken said in the Oct. 1 opinion that while going unnamed in both columns was not fatal to his case, the fact that a "reasonable reader" would be unable to draw a connection between an anonymous group of Marsh employees and Gilman was.

Oetken's decision in the defamation case is the latest in a series of losses the judge has handed Gilman in recent months.

In June, Oetken threw out — with prejudice — a complaint filed by Gilman and another former Marsh executive that accused Marsh of malicious prosecution, abuse of process, misconduct by an attorney, breach of contract relating to the Marsh Severance Plan and NYLL violations relating to the Marsh Stock Award Plan. Oetken found that Gilman failed to properly state how Marsh was at fault.