Cate Street sues paper industry newsletter
Cate Street Capital, the New Hampshire investment firm that owns two Millinocket-area paper mills with plans for three wood pellet mills, is suing a paper industry newsletter in federal court for making allegedly defamatory statements in a recent article.
The Bangor Daily News reported the lawsuit was filed in U.S. District Court in Bangor on Tuesday, claiming a May article titled “The Maine Problem” in the Reel Time Report newsletter included several false statements. The company is seeking at least $75,000 in damages.
The eight-page lawsuit said the article’s author, Verle Sutton, and the newsletter’s publisher, Industry Intelligence Inc., “acted negligently in their failure to ascertain the truth” about Cate Street, its subsidiary Great Northern Paper Co. LLC and its CEO John Halle.
“For too long, Cate Street and [Great Northern Paper] have sat by while our names and reputations have been tarnished, and while we will not comment in detail on the specifics of the lawsuit, it was in response to nonfactual reporting, escalating to such a slanderous level that it could only be addressed in a court of law,” Cate Street spokeswoman Alexandra Ritchie said in a statement, according to the BDN. “More importantly, Cate Street’s proven track record demonstrates a commitment to economic development, not only in the state of Maine, but across the country.”
Sutton’s article makes basic factual errors, according to the complaint, including statements that said the East Millinocket paper mill never restarted, and that Cate Street’s Millinocket mill has occasionally run since the New Hampshire firm bought both mills in 2011.
The Millinocket mill has not restarted since its former owner, Brookfield Asset Management, shut down operations in 2008, the BDN wrote, adding that the East Millinocket mill halted production twice since 2011 and has not restarted since a shutdown in January for energy efficiency improvements.
The complaint said Sutton made defamatory statements when he wrote that Cate Street “messed up everything right from the beginning: it agreed to pay higher local taxes than it should have; it got its sales started by selling newsprint offshore through a pulp company; it made immediate upper management changes; and it generally behaved like a company that had no clue what it was doing.”
Sutton also was alleged to have criticized Maine politicians for the $142 million in tax breaks and loans they gave to Cate Street, writing that, “One would think that politicians would be disassociating themselves from Cate Street and trying to forget that it ever existed. But, that is not the case.”
Sutton did not return calls from the BDN for comment on Wednesday.
Cate Street’s lawsuit said the statements are actionable because they adversely impact its “fitness for the proper conduct of its business.” The Reel Time Report, a monthly newsletter, has over 300 clients, including many Fortune 500 companies, according to the website industryintel.com. It offers “relevant market intelligence including news, financial data, transcripts and analyses on” industries ranging from forest products to packaging and printing.
Cate Street currently owes vendors and the Internal Revenue Service at least $6.8 million on behalf of Great Northern Paper Co., one of its subsidiaries that owns a temporarily closed paper mill in East Millinocket. The paper mill laid off 212 workers in February after ceasing production the previous month due to the subsidiary's tax and financial problems.
The firm also owes East Millinocket and Millinocket $3 million in property taxes, which it must pay as a condition of receiving the Finance Authority of Maine bond.
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