Question

Roberts allowed the company’s controller and senior vice president to backdate 20,000 shares of stock he received when he was promoted several months earlier. This allowed the stock to be valued higher. Backdating is illegal unless authorized by the company or reported as compensation. The government began a nationwide investigation of backdating and identified Roberts’s company as a target. The company admitted that backdating was wrong. Roberts said he thought the original date of issuance was wrong, and the company thought it had the authority to change it. Roberts was then fired and he was indicted by the government. Soon thereafter, the company posted on its web page a press release that said Roberts had been fired because of an “improper” incident related to stock options. It stayed on the site for 3 ½ years. At trial, evidence indicated that Roberts’s backdating was not illegal and that the company had evidence of this. Roberts was found not guilty on some charges, and other charges were dismissed. Roberts then sued the company for defamation, arguing that the company’s failure to take down the statement from its site was a republication of the defamation. Should Roberts win? Why?

Answer 1

The focal point here is backdating the stocks which although Roberts allowed, it was done by the knowledge of the company through the company’s controller and Senior Vice-President. So, he is not alone there. The only problem is that he allowed his shares to be backdated. Now, when he was caught by the police and put into trial, the company, in order to save its face, made Roberts look like a criminal who on his own did this without the knowledge of the company.

So, in this defamation case, Roberts will definitely win because the announcement was there on their website for nearly three and half years which is something too long to defame a person and spoil all their life chances. The company purposely wanted to make Roberts as the only criminal in this case.