By Robert J. Hansen
SACRAMENTO, CA – A $500 million defamation lawsuit was filed against USA Today and its parent company Gannett by Orange County based company Vivera Pharmaceuticals, Inc. (Vivera) last June.
USA Today filed a motion seeking to dismiss the case, but a Virginia judge ruled last month that some of Vivera’s and its CEO Paul Edalat’s claims are “actionable” and will move forward.
The suit stems from a June 2020 story: USA Today published an article that discussed the U.S. Food and Drug Administration’s regulation of antibody testing kits that were in high demand during the height of the COVID-19 pandemic. It focused on companies, including Vivera, and their involvement in producing COVID-19 medical supplies.
The piece, Vivera claims, was littered with inaccuracies about the Company’s products and personal attacks on Edalat’s professional reputation.
From that article, 14 statements were submitted by Vivera and Edalat which they claimed were defamatory.
The judge sustained or ruled unactionable all but two of the statements.
“Even companies led by CEOs with a history of legal entanglements—including at least one criminal past can sell tests,” USA Today reported.
Judge Robert Smith stated that, in context, “this statement is part of the overarching theme of the article, which is to highlight that the companies discussed in the article are not to be trusted by consumers.”
Broadly, this type of statement directed as a cautionary warning would not severely “harm” a company’s reputation, Judge Smith wrote.
“The pointed accusation that Vivera’s manufacturing procedures are directly controlled by “criminal” actors could damage a company’s reputation, especially during a ‘pandemic when consumers are dependent on a company marketing crucial healthcare devices,” Smith said.
Similarly, USA Today’s assertion that Vivera failed to post accuracy numbers on its website, despite the FDA requiring all companies to reveal their test accuracy numbers to the agency, carries the requisite defamatory sting.
Although the story does not state companies are required to post their accuracy numbers publicly, by further implying within the same statement that Vivera’s chief medical officer was “reluctant to answer” as to the test’s accuracy, the statement not only implies that Vivera is not transparent with the public but also insinuates that Vivera circumvented FDA requirements.
Judge Smith said about that statement, in its full context, that the implication that Vivera is not transparent and does not follow FDA protocols could lower the company’s reputation to the community, especially during the COVID-19 pandemic where anxieties related to the dissemination of misinformation were at its height.
“As a result, Vivera has been harmed in excess of $500 million due to the immediate loss of business expectancies and contractual opportunities,” the lawsuit states.
This includes at least one key contract with the U.S. Government, developed through Vivera’s contacts with high-level officials in the White House, including Dr. Peter Navarro, who has been sentenced to prison for not complying with a House subpoena.
Gannett executives and reporters may now be found directly liable for defamation, defamation per se, and tortious interference.
“Even the First Amendment right to free speech has limits and does not allow defamation,” Tucker H. Byrd, Vivera’s attorney said, adding his law firm took this case because it represents a referendum on a timely topic in society today.
“Even the First Amendment right to free speech has limits and does not allow defamation. Knowing we’re facing a formidable media giant in USA Today, we assembled a trial team which we believe has the courtroom mettle to put USA Today to that test,” Byrd said.
Edalat said USA Today knew what it wrote would harm him and his company.
“We are pleased to work with this new legal team, who is going to finish the job, clearing both Vivera and my name of the reputational damage and significant financial losses north of $500 million caused by USA Today and the other defendants,” Edalat, CEO of Vivera, said.
Byrd told The Vanguard that USA Today has shown little remorse about the case and expects it to go to trial, noting, “They’ve shown no indication of settling.”
USA Today and one of the reporters who authored the article did not immediately respond to requests for comment.
