Concordia Healthcare Corp. T.CXR.R

Remember the Thompson Law Suit? Cohodes Appealing Decision

[InsiderTrader]

ROUND 1 ON ANTI-SLAPP AND SHORT-SELLERS: THOMPSON V. COHODES

The only guidance to date in Ontario that relates to short-sellers and the Ontario anti-SLAPP legislation relates to a public company CEO’s long-running lawsuit against a short-seller, Marc Cohodes.7

In this case, Mark Thompson, the CEO of a publicly traded company sued Marc Cohodes, a former hedge-fund manager and short-seller of the company for libel. Cohodes brought a motion to dismiss Thompson’s claim pursuant to the Ontario Act.

The statements alleged to be defamatory by Thompson included a number of Twitter posts by Cohodes, alleging a variety of problems with the company. What got Thompson’s attention, however, was Cohodes’ reference to Thompson’s prior employment with another company and the suggestion that he was somehow implicated in a fraud at that company.

In Thompson the court recognized that the “management of a publically traded corporation is a matter of public interest” . The court then considered whether the plaintiff had demonstrated an objective belief of the substantial merit of the claim by looking at the necessary elements of the particular allegation. In Thompson the court considered the three elements of libel: that i) the words refer to the plaintiff, ii) the words were published by being communicated to at least one other person and iii)

the words complained of were defamatory. Cohodes conceded the rst two elements of libel. To establish that Cohodes’ comments were defamatory, Thompson had to demonstrate
with an objective basis of belief that Cohodes comments tended to lower Thompson’s reputation in the eyes of a reasonable person. Cohodes argued that his comments would be construed by the reasonable viewer as expressions of the opinion that the company was a bad investment because its management, including Thompson, has a history of being involved in poorly managed companies. The court disagreed, nding that a reasonable person would interpret Cohodes statements as alleging that Thompson committed fraud, or participated in fraud and thus were defamatory.

The court found that Thompson had demonstrated an objective belief that Cohodes could not prove the “truth of the main thrust of the libel complained of”. Thompson provided evidence that
he did not engage in any fraudulent conduct during his prior

7 2017 ONSC 2590

employment. The court found Cohodes’ evidence on this issue unconvincing, and accepted Thompson’s evidence as establishing that there were no reasonable ground to believe that Cohodes had a valid defence of justi cation.

The court in Thompson also considered the defence of fair comment. To establish a defence of fair comment, the comment must be i) on a matter of public interest, ii) based on fact, iii) recognizable as comment, and iv) fairly made in that a person could honestly make the comment on proved facts. The court found that Cohodes has no defence of fair comment since the statements complained of were statements of fact, not comment. The court stated that comments are statements of opinion, or inherently subjective and debatable inferences from facts, and
are distinguished from defamatory statements of fact, which purport to assert objective truth. Furthermore, the defence of fair comment is only available for comments based on facts proven to be true.

Finally, the court determined that the public interest in allowing the proceeding to continue outweighed the public interest
in protecting the expression of the defendant. To determine this, the court rst looked at the law of libel as it related to

the assessment of damages, noting that general damages are presumed from the publication of libel and thus need not be established by actual loss. Thus, the court dismissed Cohodes argument that his comments did not cause any signi cant decrease in the public company’s share price. The court also considered

the seriousness of the charge, stating that the “allegation that
a plaintiff has committed fraud is treated seriously.” The court also considered the importance of the plaintiff’s standing in the community and the importance of Thompson’s reputation to his profession. Additionally, the court found that the “value of the defendant’s expression is low” because the statements focused
on the personal conduct of the plaintiff over a decade earlier and because Cohodes did not provide any details to support his claims against Thompson.

As a result, the court dismissed Cohodes’ anti-SLAPP motion. Cohodes has led an appeal to the Ontario Court of Appeal, but the appeal sits in abeyance while the Court of Appeal deals with the other anti-SLAPP cases on its docket.

05 | GET SHORTY: DEFAMATION AND REGULATORY CLAIMS AGAINST SHORT-SELLERS IN CANADA

 

[rad10]

Cohodes went about things in his brash manner.  The fact is that Concordia was badly run, the former executives got taken to the woodshed by private equity The stock price, erosion of ebitda, and debt to ebitda - are not defamatory they are just numbers........................