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Kevin Trudeau v. Consumeraffairs.Com

September 6, 2011

KEVIN TRUDEAU, PLAINTIFF,
v.
CONSUMERAFFAIRS.COM, INC., A CALIFORNIA CORPORATION,
JAMES R. HOOD, AND MARK HUFFMAN, DEFENDANTS.



The opinion of the court was delivered by: Judge Joan H. Lefkow

OPINION AND ORDER

Kevin Trudeau filed a defamation suit against ConsumerAffairs.com, Inc. ("ConsumerAffairs"), James R. Hood, and Mark Huffman (collectively, "defendants"), alleging that defendants published false statements on the ConsumerAffairs website about Trudeau.*fn1

Before the court are defendants' motion to dismiss pursuant to the Citizen Participation Act ("CPA"), 735 Ill. Comp. Stat. 110/1 et seq., and alternative motion to dismiss for failure to state a claim. For the following reasons, the motions [#20, 23] are denied.

BACKGROUND

I. The Complaint*fn2

Trudeau is an author, radio show host, and consumer advocate whose work has brought him into frequent contact with government agencies, particularly the Federal Trade Commission ("FTC"). ConsumerAffairs runs a website focused on providing consumer news and advocacy.

Hood is the founder and chief executive officer of ConsumerAffairs. Huffman is a reporter for ConsumerAffairs. ConsumerAffairs holds itself out to the public as an organization that works with other media outlets and law enforcement entities "to expose and prosecute illegal and unfair business activities." Compl. ¶ 11.

On October 26, 2010, ConsumerAffairs published a lead-in article on its homepage entitled "What Kevin Trudeau Doesn't Want You to Know." The text of this article read:

Don't tell him we told you, but Kevin Trudeau had a bad day in court. A federal appeals court upheld fines totaling millions of dollars and said Trudeau's arguments had "no more substance in them than the . . . infomercials." The appeals court upheld a lower court's finding that the one-time king of the infomercial had violated numerous consumer fraud laws. Trudeau is also awaiting sentencing on a criminal contempt charge.

Ex. A to Compl. This lead-in article linked to a full article entitled "Kevin Trudeau Loses Appeal of $54 Million Judgment" and authored by Huffman. The opening paragraph of the article stated that Trudeau lost his bid to overturn a judgment requiring him to pay millions to the FTC and that he also awaited sentencing on an unrelated criminal contempt charge. The article continued that the First Circuit Court of Appeals found that "Trudeau violated the FTC ban on his infomercials, as well as numerous consumer fraud laws." It then quoted from the First Circuit's opinion in FTC v. Direct Marketing Concepts, Inc., 642 F.3d 1 (1st Cir. 2010), which was issued on October 21, 2010.*fn3 The article identified the defendants in the First Circuit case.

Trudeau was not among them. It then described the coral calcium infomercial that was at issue in the case, quoting portions of the infomercial dialogue between Trudeau and Dr. Robert Barefoot. The article reported that "the 1st Circuit found the lower courts ruled correctly in ordering Trudeau and the other defendants to turn over the gross receipts from the sale of the products." Ex. B to Compl. Trudeau, however, has not been found by any court to have violated consumer fraud laws, was not awaiting sentencing on a criminal contempt charge or any other criminal charge at the time the article was published, and was never a party to the case described in the article.

The evening the article was published, Trudeau's counsel sent an email to ConsumerAffairs notifying defendants of the errors in their article and asking defendants to immediately retract these statements. Counsel also left a voicemail message to the same effect. After hearing no response, on October 27, 2010, counsel left another voicemail and sent another letter addressed to Hood demanding a full retraction and reserving the right to pursue legal remedies. On October 28, 2010, counsel for defendants spoke with Trudeau's counsel. During this conversation, Trudeau's counsel again reiterated his demand for a full retraction of the false statements. Trudeau memorialized this demand in an email to defendants' counsel and also requested that the article be removed from the website while defendants considered Trudeau's request that a retraction be published.

On October 29, 2010, revisions were made to the article. The headline now read "Appeals Court Upholds FTC in Kevin Trudeau Case." The introductory paragraph explained that an appellate court agreed with the FTC "in a case involving Coral Calcium products hawked by infomercial king Kevin Trudeau." Ex. H to Compl. It then clarified that the First Circuit affirmed a ruling that "companies for whom Trudeau acted as a spokesman had engaged in deceptive advertising, committed consumer fraud and violated an FTC order banning Trudeau from doing any further infomercials." Id. The statement about the First Circuit affirming the lower court's order that Trudeau and others turn over the gross receipts from the sale of the products from the October 26, 2010 article remained the same.

That same day, Trudeau's counsel informed defendants' counsel that the revisions did not adequately address Trudeau's concerns and requested that the article be completely removed from the website and that a full retraction be published by October 31, 2010 to avoid legal action. Defendants' counsel responded the following day that ...


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