Defamation in hostile proceedings: key takeaways from the Eshelman v. Auerback saga

It will come as no surprise to those who have participated in a proxy fight to learn that these disputes can be heated affairs.   Parties to a fight will routinely seek to discredit the other side to bolster their own narrative or otherwise gain a strategic advantage.  In such an atmosphere, it can be difficult to draw the line between behaviour that’s merely aggressive and behaviour that crosses into unethical or illegal territory.  A recent U.S. District Court case, Eshelman v. Auerbach et al, ­provides an example of the serious consequences that can ensue for those who cross this line. A federal jury in North Carolina awarded Fredric Eshelman over $22 million USD in damages after finding that he had been defamed by Puma Biotechnology Inc.  The defamatory statement arose in the course of a campaign launched by a dissident against Puma.  The goal of the campaign was to increase Puma’s board from five directors to nine,…

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