Hertz Files Defamation Suit Against Analyst Who Said It Could Go Bankrupt

September 29, 2009

Hertz Global Holdings Inc. has sued an analyst for defamation over a report it said suggests the world’s largest car rental company could go bankrupt.

In a complaint filed Friday with the Bergen County Superior Court in New Jersey, Hertz accused Audit Integrity Inc. and its chief executive, Jack Zwingli, of defamation and trade libel over a Sept. 15 report that included Hertz among 20 large companies “most likely to declare bankruptcy” within a year.

Mark Frissora, Hertz’s chief executive, in a statement Monday called the lawsuit “an appropriate response to the publication of false and harmful information” about Hertz.

“Not only are the conclusions about our financial health baseless, but questioning the integrity of our financial reporting is indefensible,” he added.

Zwingli said in a statement: “We are disappointed that Hertz has taken this action in an attempt to stifle an opinion they do not agree with. We firmly stand behind our methodology and findings, and will vigorously defend ourselves against this unwarranted litigation.”

Hertz shares were up 40 cents, or 3.7 percent, at $11.09 in early afternoon trading on the New York Stock Exchange. They have traded in a range of $1.55 to $11.99 over the last year.

In its complaint, Hertz said the defendants had “no factual basis” for saying its financial statements were fraudulent. It also said that, had they used generally recognized methods to detect fraud, they would have concluded otherwise, or that they lacked sufficient information to say there was fraud.

Hertz said Audit Integrity announced the report on Sept. 16 and that Zwingli discussed it later that day on CNBC television, which is owned by General Electric Co.

“The unmistakable assertion disseminated by defendants in their public statements is that Hertz lacks integrity, lies to shareholders and others, engages in fraudulent financial reporting, and is heading for bankruptcy,” Hertz said.

Hertz is seeking monetary damages, including punitive damages, and a retraction, among other remedies. GE is not a defendant in the case.

According to its website, Audit Integrity provides “accounting and governance risk analysis,” using proprietary modeling that “effectively detects and measures fraud and transparency-related risks” in more than 8,500 public companies.

Hertz is based in Park Ridge, New Jersey, and said it has about 8,000 offices in 145 countries. Audit Integrity has offices in Los Angeles and New York.

The case is Hertz Global Holdings Inc v. Audit Integrity Inc. Superior Court of New Jersey (Bergen County).

(Reporting by Jonathan Stempel; editing by Maureen Bavdek and Andre Grenon)

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