Oil Company Files Bogus Libel Lawsuit Over 'Substantially True' Facebook Comment By Local Activist


Company [allegedly] does bad stuff. Gets busted. Someone points it out online. Company sues commenter for pointing out facts because details are slightly off. That's just how oil company SG Interests rolls apparently.

Popehat's Ken White has caught another case -- a First Amendment-rustling libel lawsuit filed in hopes of shutting a critic up. The Popehat Signal hasn't been lit, but the defendant does have a legal fund supporters can contribute to as he goes up against a presumably very well-funded opponent.

The comment that started the whole thing actually quotes a DOJ press release, so there's a substantial amount of factual basis for the commenter's allegations -- even if the allegations aren't completely on the nose in terms of the company's settlement with the feds.

An article about the Bureau of Land Management's cancellation of oil leases appearing on a local news site drew the attention of Peter Kolbenschlag, an activist and PR strategist. The comment SGI is suing over claims the company was fined for collusion and bid rigging.

While SGI alleges "collusion" let us recall that it, SGI, was actually fined for colluding (with GEC) to rig bid prices and rip off American taxpayers. Yes, these two companies owned by billionaires thought it appropriate to pad their portfolios at the expense of you and I and every other hard-working American.

"High Country Citizens’ Alliance public lands director Matt Reed said, “It seems to me that it’s proof of collusion to defraud the American public, to defraud the federal government. It makes me question that if [GEC and SGI] are going to be less than honest in a federal lease sale, how can the public trust them when they say they’ll be good environmental stewards and try to protect water quality and air quality?” He adds, “It certainly raises some questions.”

And from the US Justice Dept https://www.justice.gov/…/justice-department-settlement…

“Today’s unprecedented antitrust enforcement action involving illegal bidding at Bureau of Land Management auctions, demonstrates the U.S. government’s resolve to ensure there is vigorous competition for federal oil and gas rights,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “At a time of budgetary constraint, it is crucial that the federal government receive the most competitive prices for these important leases, which ultimately benefits American taxpayers.”

And it's true, mostly. SGI drew the DOJ's attention with its alleged bid rigging. White quotes from the DOJ's 2012 complaint:

Prior to 2005, GEC and SGI were separately engaged in exploration and development of natural gas resources in the Ragged Mountain Area (or “RMA”) of Western Colorado. Recognizing that they would be the primary competitors to acquire three natural gas leases for exploration and development on federal lands in the RMA that were to be auctioned by the Bureau of Land Management (“BLM”) in February 2005, GEC and SGI executed a Memorandum of Understanding (the “MOU”) on the eve of the auction pursuant to which they agreed not to compete for the leases. Instead, under the MOU, SGI would bid at the auction and, if they won, assign a fifty percent interest in the acquired leases to GEC. The parties extended the MOU to include a fourth lease auctioned by the BLM in May 2005. As a result of the MOU, the United States received substantially less revenue from the sale of leases than it would have had SGI and GEC competed at the auctions.

SGI is claiming Kolbenschlag "falsely asserted" it had been fined for collusion. And that's technically true. SGI wasn't fined for bid rigging because it paid to settle the case, rather than see if those accusations would hold up in court. Ken White explains:

Under the [...] settlement, SG Interests and Gunnison paid the United States $275,000 each to settle the antitrust case, submitted to monitoring of their bidding on BLM oil and gas leases, and paid a separate amount of money ($206,250 for SG Interests and $245,000 for Gunnison) to settle the relator's claims. The federal court agreed that time, and so SG Interests settled the antitrust case, not admitting liability but paying the government $275,000 and providing the Department of Justice with information about any joint bidding for the next five years.

So, yeah, SGI didn't pay fines for collusion. It paid money to purchase the privilege of not having to admit liability. That's pretty much the entirety of SGI's libel claims. The small difference between being fined for bid rigging and convincing the government to take money rather than an admission of guilt.

The filing [PDF] doesn't bother explaining how the "false assertion" is false. Instead, it expends a lot of words trying to weave this single comment into a conspiracy theory involving a "smear campaign" orchestrated by a diametrically-opposed PR strategist to further his own interests.

And while SGI may be technically correct it was never fined for collusion, the fact is Kolbenschlag's statement is close enough to the actual truth to possibly prevent this bogus lawsuit from going much further than his first motion to dismiss.

SG Interests' claim is bogus in several ways. First, there's the substantial truth doctrine.Under that rule, if a statement is substantially true — if the "gist" or "sting" of it is true, and any inaccuracies do not materially alter the impact of the statement — it's not defamatory even if some details are inaccurate. Here, though technically the Department of Justice did not "fine" SG Interests for bid-rigging, it did file a federal antitrust action against them for bid-rigging, leading to SG Interests paying a $275,000 settlement and consenting to bid monitoring. Now, a civil settlement isn't a finding of fault or admission of guilt, but particularly given the colloquial flexibility of the term "fine" being used in the Facebook comments to a newspaper article, Kolbenschlag has a very strong argument that his statement was substantially true. That argument is strengthened substantially by the fact that Kolbenschlag linked the Department of Justice's press release in the comment, so that the reader could immediately see that what he was referring to as a "fine" was actually a settlement. In short, SG Interests' theory of defamation is highly questionable.

On top of this ridiculousness, its speech-silencing lawsuit ratchets the potential pain by making positively delirious claims about the damage Kolbenschlag's comment has caused.

Their theory, necessarily, is that even though the United States Department of Justice sued them for antitrust violations for alleged bid-rigging and they settled the suit for $275,000 and the Department of Justice publicized the suit and the settlement, their reputation was harmed when a Facebook comment on a newspaper article — one of only three on the article — characterized that as a "fine."

No doubt the company suffered immense damages from this Facebook comment. Of course, it will be up to the company to prove these damages, which might be impossible. It's going to have a difficult time proving Kolbenschlag's statement was demonstrably false. The only entity drawing attention to potentially-damaging comments is the company itself with its petty, speech-squelching lawsuit. Colorado has no official anti-SLAPP statute to assist Kolbenschlag in his courtroom battle, but hopefully the presiding judge will see this for what it is: a transparent attempt to silence a critic of SGI (Colorado case law has examples of this in the past -- but a full anti-SLAPP law would be much more useful).

Filed Under: anti-slapp, doj, free speech, peter kolbenschlag, slapp
Companies: sg interests, sgi

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  1. identicon
    Anonymous Coward, 10 Mar 2017 @ 10:51am

    Everyone who takes the plea is not guilty

    You are basically assuming everyone who takes a plea is guilty. If they were facing billions in penalties and were offered this plea you may choose to pay the fine even if they were innocent. If they were told unless you take this plea we are going to put you on a list that will not allow you to bid on more oil leases whether or not you win, you may choose to pay a fine rather than accept the risk of not being able to bid on leases. This logic could be applied to criminal offenses. He was guilty of murder 1, since he accepted a plea for manslaughter.

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