Cautionary Tale on Commercial Dispute

The Chicago Tribune reports that two brewery business partners, Isaac Showaki and Andres Araya, are engaged in litigation over a widespread dispute.  Having met 7 years ago while working for Bain Capital and consulting in Latin America for a brewer, the business partners set up a brewery in Chicago a bit less than two years.

Despite commercial success, including distribution deals with several local Chipotle franchises as well as other accolades, the business partners have a deeply personal dispute that has boiled over into the courtrooms.

According to the lawsuit filed by Araya against Showaki apparently sounds in defamation.  It alleges that Showaki told multiple people that Araya had stolen money from the brewery — including $25,000 from a recent investor — and that he had had an extra-marital affair with a former female employee.  Defamation is a cause of action that seeks compensation for harm to a person's reputation in a community.  The elements of defamation are: 

1. (1) the defendant made a false statement about the plaintiff;
2. (2) there was an unprivileged publication to a third party;
3. (3) fault by the defendant amounting to at least negligence; and
4. (4) the publication damaged the plaintiff.

Certain defamatory allegations are considered defamation per se, which means that specific monetary damages need not be proven.  They include:

• Allegations or imputations "injurious to another in their trade, business, or profession"
• Similarly, allegations or imputations that the person lacks integrity in his profession.
• Allegations or imputations "of loathsome communicable disease" 
• Allegations or imputations of "unchastity" (In Illinois this is not limited to women or unmarried individuals)
• Allegations or imputations of adultery or fornication

Solaia Tech., LLC v. Specialty Pub'g Co., 852 N.E.2d 825, 839 (Ill. 2006).

Here, Araya is alleging that his business partner told others that he stole money, a crime and indicative that he lacks integrity in his professional capacity.  Further, it accuses him of infidelity.  Finally, these statements also are injurious to Araya's business reputation, especially since the source of the comments is his business partner.  While Araya is only suing for $25,000, it could be reasoned that his damages will exceed this sum.

Regardless, the business seems unaffected by this spat for now.  It is not unusual for business partners to have disputes.  Sometimes litigation is the answer.  Sometimes it makes more sense to hammer out these issues before they become harmful.  When it comes to defamation, like with grade school, some comments are hard to take back.  Since the bell cannot be unrung, a remedy outside of the courthouse seems useless.