SRI Firm Sued for Speaking Up

April 12, 2004 ( - Investors, and institutional investors in particular, have been increasingly vocal of late. But they may have to watch what they say.

Consider the case of Timothy Smith, senior vice president at the investment firm Walden Asset Management, who has now been sued by Cintas Corp – for allegedly making defamatory remarks at the uniform supply company’s annual meeting last October.  

According to the Associated Press, the suit claims that Smith linked the company to a “sweatshop” factory in Haiti. He was urging passage of a shareholder resolution calling on Cintas to assess the effectiveness of its vendor code of conduct and the compliance of its factories and suppliers.   Walden is the socially responsible division of United States Trust Company of Boston.

Fact “Check”

Now Cintas is asking for damages of at least $75,000, plus unspecified punitive damages. It also wants Walden barred from repeating his sweatshop comparisons, at least when talking about Cintas.   “If you are going to make allegations as a fact, those can be very damaging to a company in today’s environment,” said Cintas spokesman Wade Gates, according to the AP.   Gates also contends that the legal action wasn’t intended to stifle debate, noting that many other issues were discussed at the meeting and no one else was sued, according to the report.

The AP report says that Smith declined to comment on the case, but reports that Amy Domini of Domini Social Investments, which sponsored the resolution with Walden, said that Cintas had ignored numerous attempts to discuss this issue before the meeting.

Still, the case has been generating lots of talk among shareholder groups since it was filed in late January in US District Court in Cincinnati – a “buzz” that seems likely to intensify as the annual meeting season gets underway.