An Alaska corporation has agreed to drop its defamation lawsuit in federal court against the Center for Investigative Reporting.
The suit was filed 14 months ago by Suulutaaq Inc., a company that obtained a $54 million federal stimulus contract to relocate the Napa Valley Wine Train’s tracks.
The company claimed that a Jan. 30, 2010, California Watch story about the project defamed the company and its CEO, Samuel Boyle. The case was officially dropped last week.
The nonprofit, independent Center for Investigative Reporting launched California Watch in 2009 to focus more investigative reporting resources in the state. The story about the wine train project was one of the first stories produced by the startup newsroom.
Suulutaaq had sought $24 million in damages and an apology. Boyle was seeking $8 million, according to the complaint.
The lawsuit, which was filed in the U.S. District Court for the District of Alaska, also named California Watch senior reporter Lance Williams, who wrote the story, and the San Francisco Chronicle, which published it.
Throughout, California Watch and the Center for Investigative Reporting stood by the story. The company never asked for a correction and could not identify any factual errors.
The four-count complaint had challenged 11 different statements in the article. In December, U.S. District Judge Timothy M. Burgess found the bulk of Suulutaaq's case to be “legally insufficient” and dismissed most of it.
In agreeing to drop the complaint, the company received nothing in return. The company had retained Patton Boggs, based in Washington, D.C., to represent it. Davis Wright Tremaine represented the Center for Investigative Reporting and Williams.
“We’re happy to have this behind us,” said Center for Investigative Reporting Executive Director Robert J. Rosenthal. “The story illuminated details about how stimulus funds are spent in California, focusing on a project that had already been criticized by elected officials. All of the facts in the story were based on multiple sources and public records – including records Suulutaaq itself submitted to government agencies.”
Added Mark Katches, the Center for Investigative Reporting’s editorial director: “To this day, we can’t quite figure out why they sued us. Maybe they thought a small nonprofit would be intimidated by a company with deep pockets that had hired a high-powered law firm to come after us. But that was never going to be the case here.”
At issue was the January 2010 California Watch report that described how an ambitious flood control project on the Napa River came to be financed with funds from the federal stimulus program, and how Suulutaaq obtained the job.
The suit complained that the story portrayed Boyle as “an incompetent businessman and a dishonest person who conned people” into investing in a dot-com for sail boaters that later failed.
California Watch has distributed dozens of investigative and enterprise stories to more than 200 editorial partners across the state since its first story was published in September 2009. It has forged distribution agreements with many of the state's largest news organizations.
As part of its agreements with news outlets, California Watch and the Center for Investigative Reporting take responsibility for any legal costs and damages in the event of a claim based on the work of any of the center’s reporters or editors.
"The costs of fighting this suit were not insignificant," Rosenthal said.