I am a firm believer that companies that sue critics (whether the critics are journalists, customers, forensic accountants, or otherwise) have something to hide.
This was the case with Medifast Inc., a multi-level marketing company that sued me (and others) for $270 million nearly five years ago. (They suffered a resounding loss against me, lost again on appeal, and now must pay my substantial attorneys fees… which of course they are claiming are inflated…. disregarding the fact that huge fees are a result of the need to defend against their shady litigation tactics.) Medifast didn’t like the fact that I expressed my opinion of its business model and business practices.
Other companies have tried such tactics:
- Shop to Earn threatened bloggers with legal action
- This company did what they did
- Overstock.com threatened several journalists through stalking and intimidation tactics
- Shaquille O’Neill threatened Timothy Sykes after Tim exposed his participation in a pump and dump scheme
- MonaVie (a multi-level marketing company that sells magic juice) threatened a critic with legal action
- InterOil management threatened a critic
- Former Utah Attorney General Mark Shurtleff (now in loads of trouble) threatened Sam Antar over his investigative journalism
I could go on, but you get the idea.
In an article at TheStreet.com last week, Herb Greenberg reminded us of the lawsuit brought by Hertz against Audit Integrity in 2009. Audit Integrity published a report that listed 20 companies it thought had a high risk of filing bankruptcy. At the time, Hertz had just posted a $1.2 billion loss for the prior year. And now we see that Hertz needs to restate its financials for 2011, 2012, and 2013.
Here’s the takeaway: When companies are threatening, suing, and otherwise acting aggressively to silence critics, expect that there are problems they are trying to hide. For the companies listed above, there are/were problems with their products, business models, management, or operations. The critics were bringing those problems to light, and we certainly can’t have that!