Rivera v. Allstate Insurance Co.

Allstate investigated suspicious trading on its equity desk and unearthed email evidence that portfolio managers might be timing trades to inflate their bonuses at the expense of portfolios, including pension funds to which Allstate owed fiduciary duties. Allstate retained attorneys, who hired consultants to calculate potential losses. Because actual losses could not be established, the consultants used an algorithm to estimate a potential adverse impact of $91 million. Allstate poured $91 million into the portfolios. Allstate determined that four portfolio managers had violated company policy and fired them. Allstate's 2009 Form 10-K explained these events and an internal memo described the same information. Neither document mentioned the fired portfolio managers. The former employees sued, alleging defamation based on those documents and alleged that Allstate violated 15 U.S.C. 1681a(y)(2), the Fair Credit Reporting Act, by failing to give them a summary of the attorneys' findings after they were fired. A jury awarded more than $27 million in damages. The judge added punitive damages and attorney’s fees under the Act. The Seventh Circuit vacated. The 10-K and internal memo were not defamatory per se and are actionable (if at all) only on a theory of defamation per quod, which requires proof of special damages causally connected to the publication. The plaintiffs testified that they could not find comparable work after being fired, but presented no evidence that any prospective employer declined to hire them as a consequence of Allstate’s statements in the documents. The four lacked standing for the FCRA claims. View "Rivera v. Allstate Insurance Co." on Justia Law