Lawsuit Raises Questions About Limits Of Stock Research Calls
September 30, 2008, Dow Jones Newswires

Hertz recently filed a lawsuit against Audit Integrity, an independent research company that identified Hertz as a possible bankruptcy candidate, claiming it was defamed by Audit Integrity and its Chief Executive Jack Zwingli on CNBC. The suit seeks injunctive relief and unspecified monetary damages, including punitive damages, for "false and harmful" information about Hertz.

From a legal standpoint, Hertz could have a difficult time basing claims on Audit Integrity's opinions or interpretation of publicly available factual information, said Owen Pell, a partner with international law firm White & Case LLP in New York. He also noted it was quite likely that any statements made by Audit Integrity's CEO on television wouldn't be taken in isolation but would need to be analyzed in the overall context of information available.

"Lawsuits have been attempted over the years relating to opinions expressed on business performance, but companies that express those opinions generally are not liable for opinions that are simply incorrect, even if negligently so," said Pell.