On August 1, a three-judge panel of the New Jersey Appellate Division affirmed a $40 million jury award to investment firm NuWave Investment Corporation for reputation damage by an allegedly inaccurate and defamatory background report issued by First Advantage Litigation Consulting LLC. Court records indicated that the allegedly offending information in the report issued by First Advantage came from Hyman Beck & Co. Inc., a competitor of NuWave.

NuWave initially won a $2.85 million trial award that was overturned in 2015 by the New Jersey Supreme Court, resulting in a new trial. Following the $40 million verdict in the second trial, First Advantage filed a post-trial motion arguing the evidence failed to demonstrate NuWave’s entitlement to actual general damages or actual special damages under state law. The Superior Court denied the motion.

According to the appellate panel, damages were adequately proven based on evidence that a major client of NuWave reduced its investments – from $10 million to $4 million – as a result of information contained in the background report at issue.

“Contrary to defendant’s claim, [NuWave’s client] did not base his decision to delay any investment with NuWave on non-defamatory portions of the report; [the client] testified that the entirety of the report was the worst he had ever seen, and every paragraph raised a ‘red flag,’” the opinion read.

The panel also refused to give First Advantage a new trial, finding “no miscarriage of justice” based on the court’s alleged missteps in allowing testimony by NuWave’s principal about emotional damages and excluding statements that the jury found in the first trial were not defamatory.

Troutman Sanders will continue to monitor these developments and provide any further updates as they are available.