The defamation battle between Chicago’s two big supply chain visibility players — project44 and FourKites — continued Wednesday as the case moved from the 1st Judicial District Appellate Court of Illinois to the Illinois Supreme Court for a review of the state’s laws.

The dispute originates from emails sent in May 2019 and involves accusations of ties to intimidation, financial impropriety and organized crime.

On May 19, 2019, an email from “Ken Adams” raised concerns about accounting improprieties at project44. The email sent to Jim Baum and Kevin Diestel — both project44 board members — and purportedly from a former employee, alleged connections to a “Chicago Mafia” and highlighted rampant accounting improprieties. It also linked the issues to the departure of project44’s chief financial officer; referenced a canceled Estes contract; and warned of brewing discontent, predicting a potential scandal akin to the fraudulent blood-testing company Theranos.

On May 27, 2019, a second email from “Jason Short” criticized project44’s technology. Addressed to new Chief Revenue Officer Tim Bertrand, it warned against selling subpar products. 

Project44 denied all claims made in the emails, and in April 2020, the company filed a suit against FourKites for defamation and civil conspiracy.

During pre-suit discovery with Google, project44 discovered that the same individual accessed both the Ken Adams and Jason Short accounts using two IP addresses. The emails, sent a week apart and referencing Theranos, hinted at their connection. One of the IP addresses accessing Jason Short’s account belonged to FourKites India, identifying Sriram Nagaswamy and Rashi Jain as directors of FourKites India.

Additionally, the Ken Adams account’s subscriber information revealed the mobile number to be 847-644-3564, which is also listed as an official FourKites phone number in U.S. Securities and Exchange Commission documents. In a 2019 Crain’s Chicago post for a “Roundtable on Logistics,” this phone number is listed as FourKites’ founder and CEO Mathew Elenjickal’s direct number.

Illinois defamation statute

In Illinois, to succeed in a defamation claim, the plaintiff typically needs to establish three key elements: a false statement about the plaintiff; communication of this statement to a third party (referred to as publication); and a result of harm to the plaintiff’s reputation.

Illinois law also distinguishes between two forms of defamation: defamation per se and defamation per quod. 

“The Illinois Supreme Court considers five types of statements to be defamatory per se: (1) accusing a person of committing a crime, (2) accusing a person of being infected with a “loathsome communicable disease,” (3) accusing a person of lacking ability or integrity in the performance of job duties, (4) statements that otherwise prejudice a person in his profession or business, and (5) accusing a person of adultery or fornication. … A plaintiff does not need to plead or prove actual damage to his reputation to recover for a statement that is defamatory per se,” said third-generation supply chain professional Matthew Leffler, managing partner at Armchair Attorney. 

If a statement does not meet the criteria for defamation per se, it falls under defamation per quod, requiring plaintiffs to demonstrate actual damages. 

In 2020, FourKites sought dismissal of project44’s lawsuit, presenting two main arguments.

FourKites claimed that the emails didn’t meet the defamation standard for publication as they weren’t published to a third party, asserting that project44’s board members were part of the organization. 

Secondly, FourKites asserted that the claims in the emails lacked the statements needed to prove defamation per see.

FreightWaves contacted FourKites for a statement regarding the ongoing case, to which the company responded, “We do not provide comments on pending litigation.”

“The circuit court dismissed [our case], concluding that the communications, while otherwise actionable, were not ‘published’ as a matter of law because of whom the communications were sent to holding that the recipients were legally no different than the corporation itself,” Jennifer Coyne, general counsel for project44, told FreightWaves.

Project44 did appeal that decision to the Appellate Court of Illinois and, on Nov. 22, 2022, the court agreed with project44 and sent back the dismissal for further review by the Illinois Supreme Court to review the state’s defamation law.

“The appellate court reasoned that a corporation is not only concerned with its reputation to the outside world. Just as employees care about their reputation within the corporation, the corporation cares about its reputation among its own employees — be they high-ranking executives, lower-level workers, or non-employee directors,” Coyne said.

Supreme Court consideration

Deliberation on Wednesday revolved around the inquiry into whether the act of dispatching these emails could be deemed a form of publication, and secondly, whether there existed tangible harm to the plaintiff’s reputation.

In regards to concern of publication, FourKites argued the recipients of the emails were essentially the same as the company and thus there was no third-party publication. 

“The executive leadership team, specifically those with titles such as chief revenue officer and chief operations officer, holds the responsibility of making decisions that shape the company and influence its reputation. These individuals determine how the company is perceived, what values it prioritizes, and assess the impact on its reputation. Considering this, the individuals making such decisions should be regarded as representing the company in matters of reputational harm. Without this distinction, any unfavorable comment made to a corporation could potentially be used as grounds for a defamation claim,” said Scott Gilbert, representation for FourKites.

Project44’s argument to FourKite’s response mirrors the Appellate Court decision in favor of them.

“The Appellate Court more forcefully analogizes these publications to attempts of corporate sabotage, and to inject chaos into project44 his workplace and that’s exactly why they are now important to the consideration of the publication issue. … FourKites didn’t send them to the company. It sent them to three individuals and sought to drive a wedge between those individuals and the employer that they worked for,” said Douglas Albritton, who represents project44.

The judges questioned both sides about where to draw the line for who constitutes the company versus a third party for publication. Both sides argued about precedent, corporate law principles and policy considerations.

In regards to harm to reputation, FourKites’ main argument focuses on the time spent between the email being received and complaints being filed.

“Eleven months passed between when the emails were sent and when the complaint was filed. And in that time, [project44] cannot identify any actual reputational harm. And we highlighted that fact in our brief to this court, and [project44] made no response. … That silence is critical because [project44] has alleged defamation per se, being the damages should be presumed and need not be proven,” Gilbert said.

Project44 argues proof is not necessary under state law for defamation per see. 

“The core of this fight is whether two outside board members and [Bertrand] are considered ‘another person’ outside of the company itself. This is a novel case, which means there is not a strong precedent that determines the outcome. FourKites is arguing that the C-suite should be considered the same as the company. This would include board members and other executives. If the Illinois Supreme Court agrees with FourKites, then the lawsuit of defamation per se fails,” Leffler said.

Although, Leffler said, “For what it’s worth, I agree with [project44].”

Both companies now wait for the state Supreme Court to issue a ruling on the Appellate Court’s decision acknowledging project44’s case to sue for defamation per see.

“I think this case highlights a consistent pattern in which FourKites demonstrates a lack of integrity in handling information,” project44 founder and CEO Jett McCandless told FreightWaves. “I have full confidence in the judicial system that justice will be served.