Eliot Spitzer & Slate.com Sued for $75 Million

MANHATTAN (CN) - Two former Marsh & McLennan executives say Eliot Spitzer defamed them in an Aug. 22, 2010 Slate.com article, "They Still Don't Get It." In separate complaints, William Gilman and Edward McNenney Jr. sued New York's former governor and the online magazine for $75 million.

Gilman sued Spitzer and The Slate Group in Federal Court. McNenney filed his notice and summons against the same defendants in New York County Court.

All references to the "complaint" in this article refer to Gilman's federal complaint.

Gilman, who worked for Marsh & McClennan from 1976 to 2004, claims Spitzer defamed him in comments defending his 2004 investigation of Marsh & McClennan when Spitzer was New York's attorney general.

Spitzer sued Marsh & McClennan in October 2004, alleging "fraudulent business practices, antitrust violations, securities fraud, unjust enrichment, and common law fraud," Gilman says in his complaint.

"Marsh responded to the Marsh Complaint by replacing its Chief Executive Officer."

In September 2005, Spitzer's office indicted Gilman and seven others on 37 counts.

In February 2008, after an 11-month bench trial, Gilman and McNenney were convicted of one count: restraint of trade and competition, according to Gilman's complaint. But during three other Marsh executives' trial before the same judge, it was revealed that "700,000 pages of exculpatory documents and exculpatory deposition testimony of key witnesses had not been disclosed to Mr. Gilman and Mr. McNenney during their trial," Gilman's complaint states. "As a result, on July 2, 2010, Justice Yates vacated his own verdict convicting Mr. Gilman and Mr. McNenney, finding that 'the newly discovered contradictory evidence undermines the Court's confidence in the verdict.'"

The Wall Street Journal then scorched Spitzer in an editorial on Aug. 13, 2010, which ran under the headline, "Eliot Spitzer's Last Admirer."

Spitzer replied in his allegedly defamatory article in Slate.com, which Gilman calls "patently false and defamatory to Mr. Gilman in several respects. Mr. Spitzer indicates that Mr. Gilman is guilty of crimes, even crimes he was never accused of, despite the fact that his conviction had been vacated and that Justice Yates indicated, with the vast amounts of exculpatory evidence 'would have produced a different result.' While Mr. Spitzer's article does not name Mr. Gilman specifically, it is clear from the context that Mr. Spitzer is referring to Mr. Gilman."

Gilman adds that "any person with Internet access can easily determine that Mr. Gilman and Mr. McNenney were the two former Marsh employees who had their convictions vacated, and, thus, that Mr. Spitzer was referring to Mr. Gilman in his defamatory statements."

Gilman adds that Spitzer wrote the article as "a member of the media and no longer a public official."

Gilman's complaint states: "In the August 22, 2011 article, Mr. Spitzer defames Mr. Gilman by stating: 'Unfortunately for the credibility of the [Wall Street] Journal, the editorial fails to note the many employees of Marsh who have been convicted and sentenced to jail terms.' (Emphasis added.)

"Contrary to Mr. Spitzer's statements, no Marsh employees were sentenced to jail terms, particularly not Mr. Gilman as all of the charges against him were dismissed or vacated. As such, Mr. Gilman has not faced any sentence at all. At the time Mr. Spitzer made these statements, he knew that Mr. Gilman, as well as his fellow Marsh employees who went to trial, had been acquitted of the charges made against them. Mr. Spitzer was also well aware of the outcomes of the other cases against Marsh employees, all of which were resolved with dismissals or sentences of an unconditional discharge. No Marsh employee was sentenced to incarceration.

"Mr. Spitzer's defamation continues in the article. Mr. Spitzer goes on to state that: 'Marsh's behavior was a blatant abuse of law and market power: price-fixing, bid-rigging, and kickbacks all designed to harm their customers and the market while Marsh and its employees pocketed the increased fees and kickbacks.' (Emphasis added.)

"However, Marsh's behavior with respect to contingent commissions and otherwise, and Mr. Gilman's behavior in particular, was not illegal. All of the criminal allegations resulted in acquittals, dismissals, or unconditional discharges, including the allegations against Mr. Gilman. Also, in early 2010, the New York Attorney General even gave Marsh permission to use contingent commissions again despite a settlement agreement with the New York Attorney General where Marsh agreed not to do so. There was nothing illegal about any of the actions alleged by the New York Attorney General.

"The same statement by Mr. Spitzer was false and defamatory because, contrary to his assertions, no customers were harmed by Mr. Gilman's actions. Mr. Spitzer, however, falsely stated: 'Marsh's behavior was a blatant abuse of law and market power: price-fixing, bid-rigging, and kickbacks all designed to harm their customers and the market while Marsh and its employees pocketed the increased fees and kickbacks.' (Emphasis added.)

"Most egregiously, Mr. Spitzer's also falsely alleges that Mr. Gilman and his fellow employees 'pocketed the increased fees and kickbacks' related to contingent commissions. Mr. Spitzer falsely states: 'Marsh's behavior was a blatant abuse of law and market power: price-fixing, bid-rigging, and kickbacks all designed to harm their customers and the market while Marsh and its employees pocketed the increased fees and kickbacks.' (Emphasis added.)

"In fact, no employee profited from the use of contingent commissions in any way, nor from any of the actions allegedly committed by Mr. Gilman. As Mr. Spitzer is undoubtedly aware, neither he nor the subsequent attorneys general ever even alleged that Mr. Gilman or any other Marsh employee profited from the alleged scheme or, in any way, took kickbacks.

"Mr. Spitzer's statement about employees pocketing fees and kickbacks is patently false and was never even an allegation made against a single Marsh employee."

Gilman and McNenney are both represented by Jeffrey Liddle of Liddle & Robinson in New York. Gilman seeks $60 million, McNenney $15 million.

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