Friday, February 6, 2004

Cintas sues for defamation

Cites shareholder claim of using sweatshop

By Mike Boyer
The Cincinnati Enquirer

Cintas Corp. has brought a rare defamation lawsuit against a Boston investment firm and one of its executives for accusing the uniform supplier, at its October annual shareholders meeting, of supporting sweatshops.

Cintas is the target of a national union organizing effort.

It filed the lawsuit last week in U.S. District Court in Cincinnati against Boston Trust & Investment Management Co. and Timothy Smith, senior vice president of its Walden Asset Management division.

Patrick McGurn, special counsel for Institutional Shareholder Services, a Maryland firm that provides research to institutional investors, said he's never heard of a defamation lawsuit over comments at a shareholders meeting.

He said most shareholder meetings have a kind of "Roman circus environment'' with shareholders making all types of claims and comments. "If you've ever been to a meeting with (corporate activists) the Gilbert brothers or Evelyn Y. Davis, you know that,'' he said.

Walden, which advocates "socially responsible'' investing, with Domini Social Investments in New York, sponsored a resolution at the Oct. 14 Cintas meeting asking the company to evaluate its vendor code of conduct and the compliance of off-shore factories and suppliers.

Domini, which isn't named in the lawsuit, and Walden said they held about 60,000 Cintas shares.

Although the proposal was rejected by shareholders, the lawsuit says Walden and Smith linked Cintas to a Haitian factory described as a "sweatshop.''

The lawsuit said Smith claimed Cintas products were being made in Haiti "in violation with its own code of conduct'' and by a factory "which is a poster child for sweatshops.''

According to the lawsuit, Smith said a Haitian company, Haitian American Apparel Co., was a "major supplier to Cintas.''

After the meeting, a Cintas spokesman said the company had never heard of Haitian American and that it "is not someone we do business with.''

Marc Mezibov, a Cincinnati lawyer who handles free-speech cases, said that to succeed, the case would face a higher burden of proof than defamation based on actual malice, where someone says bad things about another because of dislike.

He said the Cintas case would face the higher standard of constitutional malice first set down in New York Times vs. Sullivan - that the statements were wrong or were made with "reckless disregard'' to their truth.

Cintas says Walden, in a news release, and Smith, at the meeting, made comments "with actual knowledge that the statements were false, or at the very least, with reckless disregard to the false and defamatory nature.''

Smith, a former executive director of the Interfaith Center on Corporate Responsibility, said Thursday that he hadn't seen the lawsuit and declined comment. Representatives of Cintas didn't return calls.

The lawsuit says UNITE, the needletrades union that has a corporate campaign to win bargaining rights for Cintas workers, was the "sole source'' for the statements at the meeting even though Walden has a policy of not relying on one source.

The suit claims Walden and Smith "disseminated and published'' the statement knowing it was part of UNITE's campaign.

The lawsuit seeks damages of at least $75,000, plus unspecified punitive damages and an injunction preventing Walden from making statements linking Cintas to Haitian sweatshops.


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