Whew. Not a great look there, Mr. Senatorial Candidate.
Wisconsin Republican Senate candidate Eric Hovde has launched a lawsuit against several Wisconsin television stations and a Democratic Party aligned PAC for running ads that he claims defamed him.
The ad states that Hovde, the CEO and chairman of the board for Sunwest Bank, and his family “rigged the system to rake in $30 million in government subsidies and loans, and now he’s sheltering his wealth in shady tax havens around the world.” It also claims at one point that Hovde is a “California banker.”
The ad was cut by WinSenate PAC. The outfit is one of the defendants named in the suit, along with Gray Media Group, Nexstar Media, Inc., The Evening Telegram Company, Sinclair Communications, LLC, Fox Television Stations, LLC, ION Media Networks, Inc. and Scripps Media, Inc., according to an Aug. 9 filing.
None of this is advisable. And yet, it appears the Holtzman Vogel law firm advised Hovde to run with this. The law firm sent letters to the defendants — a long list that includes seven defendants who cannot possibly be found liable for running the ad produced by WinSenate PAC. The other defendant would be the producer of the ad, which has almost a zero chance of being successfully sued for the claims it made in the ad — not when the defendant is a public figure.
The letter sent to the stations makes a bunch of claims about the ad, which is fine. But the only correct target for this lawsuit is the creator of the ad, even though the Holtzman Vogel law firm goes out of its way with a bunch of footnotes in hopes of making the media company defendants feel like they could be held liable for running the PAC’s ad.
Your station is under no obligation to air advertisements sponsored by non-candidate organizations (such as “WinSenate”), and you should reject such advertising on the basis of its false, misleading, and deceptive content. In fact, your station is legally responsible for the content of non-candidate advertising. Your station has an obligation both to its viewers and, under the law, “to protect the public from false, misleading or deceptive advertising.” This duty necessitates “the additional obligation to take reasonable steps” to affirmatively determine the veracity of the statements contained in advertisements and the authenticity of the sources cited. You must be able to satisfy yourself “as to the reliability and reputation of every prospective advertiser.” Failing to take these steps, and allowing false and misleading advertising to air, may be “probative of an underlying abdication of licensee responsibility.”
Wow. Sounds so very serious. But there’s really nothing actionable happening here, no matter how many footnotes were attached to this pile of words.
The first sentence is true: stations are not obligated to carry ads from political action groups. They are — if they’re subject to FCC regulations (over the air broadcasters) — obliged to carry ads from political candidates. But the thing about those ads is they’re political speech, which isn’t subject to the same “truth in advertising” standards private companies must adhere to.
As for the rest of the citations, they’re mostly meaningless. (And they only mean something if every TV station listed is FCC-licensed.) One citation points to this 1961 public notice posted by the FTC and FCC on broadcaster duty when it comes to truthful ads. And all it really says is that broadcasters need to make a good faith effort to prevent blatantly false (or blatantly offensive) ads from being aired on their stations. It does not require them to vet every claim made in the ad, nor does it expect them to recognize every false claim made by advertisers. Instead, it makes broadcasters aware the FTC and FCC will publish “alerts” when any entity raises these agencies’ suspicions and cautions that running ads from companies listed on “alerts” would raise “serious question[s]…as to the adequacy of the measures instituted and carried out by the licensee…” In other words, stations need to make an effort to stop false ads from airing, provide documentation of their efforts, and definitely avoid running anything from entities flagged by the feds.
The letter also cites this 1978 court opinion in support of its claims of station liability for the ads Eric Hovde is suing over. In this case, the FCC investigated Cosmopolitan Broadcasting, an FCC-licensed broadcaster that had basically turned over all of its content to third parties, allowing them to purchase air time to run their own content and ads. The FCC said that Cosmopolitan was still responsible for vetting this third party content, which it had clearly failed to do.
The upshot of the decision was Cosmopolitan being ordered to (re-reads decision) pencil-whip a new checklist written for it by the DC Circuit Appeals Court judge — one that stated who reviewed what third-party content and when. It’s hardly the sort of thing that should strike fear in the stations being sued by Hovde. Nothing in any of the citations suggests the stations can be held directly liable for WinState ad — at least not by Eric Hovde. The FCC and/or FTC could take action, but nothing indicates either of these entities ever suggested failing to vet ads is an actionable claim in civil court.
WinState PAC is the only legitimate defendant in this lawsuit, but that doesn’t mean Eric Hovde is any less likely to lose. The claims made in the ad were based on content published by ProPublica in one of its newsletters.
Between 2003 and 2013, Hovde’s asset management firm Hovde Capital reported non-controlling investments worth up to $74 million in more than a dozen Bermuda-based insurance companies, according to a PI analysis.
Bermuda doesn’t have a corporate income tax and has even offered “tax assurance certificates” to ensure holders temporary insulation in the event that ever changes. Every Bermuda insurer that Hovde Capital invested in held those certificates, according to a review of SEC documents.
Now, that’s not exactly the same thing as “sheltering his wealth in shady tax havens around the world.” But it could be inferred from ProPublica article that Hovde doesn’t mind helping other people shelter their wealth in shady tax havens. The gist of the ProPublica reporting is that these investments seem a bit hypocritical when Hovde stated in ads during his first Senate run in 2012 that it was “wrong” that major corporations dodged corporate taxes and, in 2021, expressed support for a minimum corporate tax rate bill, claiming he’s always “hated” the fact that “companies like Goldman Sachs or Apple can put all their technology in offshore places and pay no taxes.”
Hovde can go ahead and pursue this lawsuit, but it’s a non-starter. The assertions made by the PAC might have been a bit off-base, but they’re far from the deliberate indifference needed to reach the actual malice standard Hovde will have to prove to secure a ruling in his favor. This is spray-and-pray litigation Hovde apparently hopes will silence one of his critics, either by forcing the PAC to pull the ad or intimidating TV stations into refusing to do business with WinState.
Hovde should know better. He’s a political candidate who has plenty of opportunities to counter the narrative pushed by his opposition. He’s got all the free speech he needs to accomplish this. It’s a shame he feels the best way to handle this is to deter the speech of others.
