A new client of ours, Guttman Conservation, has requested we sell to it on 60-day credit terms. It is being sued for defamation. I would like to know if this claim has any merit before we ship product to them on credit.

Guttman Conservation, as you may know, restores and appraises museum-grade paintings. It terminated one of its restorer-appraisers, an employee named Dr. Jacquelin Yu. She was fired after she told the online edition of the Journal of Paint Restoration that Guttman falsified an appraisal report she had prepared for the National Institute of Fine Arts. It regarded the restoration of a painting attributed to the early-Rococo artist Raphael Renault, known as "The Eyes of Orpheus".

In her Complaint. she alleges that her report contained her analysis of the Eyes of painting. She reached the conclusion, based on the paint layering technique, that the painting is not a genuine Renault, but a fake. She alleges that Dr. Clyde Guttman, the CEO pulled that crucial section describing all this out of her report. What he passed along to the NIFA, she alleges. was the abridged report, under her name, that did not question that it is an authentic Renault.

It further alleges that, in a follow up article in the JPR, Dr. Guttman was interviewed and responded to Yu's claim. He said that she was dishonest and a liar because there was no falsification "not a thing was deleted from her report." He said Dr. Yu was just "a disgruntled employee" who was a "poor performer".

The Complaint alleges that Guttman Conservation and Clyde Guttman defaming her in the JPR interview. It seeks damages of $100M. Asked by the JPR to comment on Yu's suit, Guttman said "it's a nothingburger, she has her personal opinion, and we, most certainly, have a very different one."

I am concerned about extending credit to Guttman Conservation. With this expensive litigation, possible reputational damage, and exposure to a big verdict, it may be unable to pay our bills.

Does Yu's defamation claim stand any chance of success? Thoughts?

Regards,

Please come up with a relevant applicable law response that applies to the issue. Follow the IRAC method in your response.

The full form of IRAC is Issue, Rule, Applicable Facts, and Conclusion.