Can companies avoid defamation by repeating lawsuit allegations to competitors' clients? RainFocus v. Cvent Explained

In a significant ruling for business defamation law, the Utah Court of Appeals held in RainFocus v. Cvent that companies cannot shield themselves from defamation liability simply by repeating allegations from pending litigation when communicating with competitors’ clients.

Background and Facts

RainFocus and Cvent are competitors in the event management software industry. While Cvent’s federal lawsuit against RainFocus for trade secret misappropriation was pending, Cvent allegedly contacted RainFocus’s clients and prospective clients. In these communications, Cvent’s CEO and general counsel claimed that RainFocus had stolen source code, misappropriated trade secrets, and engaged in other wrongful conduct. RainFocus sued for defamation and intentional interference with economic relations.

Key Legal Issues

The court addressed two primary defenses: (1) whether Cvent’s statements were protected as truthful descriptions of pending litigation, and (2) whether the statements constituted protected opinion rather than actionable factual assertions.

Court’s Analysis and Holding

The court rejected both defenses. Regarding the truth defense, the court distinguished between the judicial proceeding privilege that protects statements made within litigation and the prohibition against excessive publication of such statements. The court reasoned that allowing parties to freely republish lawsuit allegations would create an “end run around” the excessive publication doctrine and incentivize filing suits solely to spread accusations against competitors.

On the opinion defense, the court applied the four-factor test examining: (1) common usage of words, (2) objective verifiability, (3) full context, and (4) broader setting. The court found that Cvent’s statements read as factual assertions rather than protected opinion, particularly given they came from executives who would be expected to have inside information and were made in private, targeted communications to undercut a competitor’s business.

Practice Implications

This decision clarifies important boundaries for business communications during litigation. Companies cannot assume that referencing pending lawsuits provides blanket protection for repeating allegations to third parties, especially competitors’ clients. The ruling reinforces that the excessive publication doctrine remains vital in preventing abuse of litigation privilege, and that context matters significantly in determining whether statements constitute protected opinion or actionable defamation.