Broadspring and Congoo have been competitors in the online marketing space since 2008. Before 2012, the companies primarily competed for IAB display advertising space on certain premium web sites.
In late 2012, Broadspring created a new division named Content.ad.
Content.ad negotiates with web sites (publishers) to secure space on their pages (typically below the articles). Content.ad is responsible for filling the space with advertisers. The Content.ad unit typically features several advertisers, each presenting a small, thumbnail image and a headline promoting their product, service or website. These advertisers pay Content.ad and Content.ad passes on the majority of those funds to the publisher.
In early 2013, Content.ad started to grow significantly. Some of this growth came at the expense of Congoo/Adblade. In several email exchanges around the time the defamatory statements started, Adblade executives comment to each other that their “publishers are dropping like flies” and “that we need to do something about this”.
In February of 2013, the Senior Vice President of Business Development at Congoo/Adblade, Rafael Cosentino, using a profile and a name that was not his, created an online web page which purported to be an unbiased review of online advertising services. He falsely claimed that he had used many of the services himself and that he ran a network of vertical content sites.
The fake “review” of Broadspring was written by Mr. Cosentino as well as with significant input from Congoo/Adblade’s C.E.O. Ashraf Nashed and contained several false and defamatory statements about Broadspring.
In early March of 2013, Broadspring was notified by the owner of one of the publishers that it just started working with, that he had received a link to this web page and that he no longer wanted to work with Broadspring.
Management at Broadspring immediately suspected that the “review” was fake and that Congoo/Adblade was somehow involved with its creation and publication.
Broadspring’s counsel wrote to the service where the “review” was hosted and requested that it be taken down as it contained multiple falsehoods. The hosting service complied and the web page was removed.
At the same time Broadspring’s counsel wrote to Congoo/Adblade and their counsel requesting that they confirm authorship of the “review”, advise what other publishers had been sent a link to the “review”, issue a retraction of the false statements it contained and agree not to engage in this type of activity again.
Congoo/Adblade responded that Broadspring had not proven it was them that published the “review’, and claimed that the information it contained was accurate and rejected all of Broadspring’s requests. Broadspring then filed a lawsuit against Congoo/Adblade in federal court in the Southern District of New York.
During the discovery phase of the suit, it surfaced that on several occasions Congoo/Adblade had either sent links to the review to publishers or had posted links to the review online. And, when posting links to the fake review online, they did so using still more fake names. In addition, in numerous written communications to publishers, Congoo/Adblade had repeatedly made statements that were defamatory to Broadspring. Some of these repeated the false statements that were published in the “review” and some of these were new. Remarkably, many of these communications were made after Broadspring’s counsel had put Adblade on notice that these statements were false.
In addition, Broadspring learned that Rafael Cosentino sent links to the F.T.C. inviting them to read the “review” in the hopes that it would get them to start an investigation of Adblade’s competitors. He did not tell the FTC however that he and Congoo/Adblade’s C.E.O., Ashraf Nashed had written the review using a false profile.
Adblade also published another series of defamatory statements about Broadspring on another website using still another fake name a full month after Broadspring filed suit. And, Congoo/Adblade’s Rafael Cosentino even sent a link to the article where he posted under at least two fake names to the F.T.C.
Remarkably, even though Congoo/Adblade had published the defamatory “review” using a false profile, and had sent the “review” to the F.T.C. without disclosing that they had created it, and had sent a link to an article where Cosentino had posted at least twice using still more fake names to the F.T.C. after Broadspring brought suit, Congoo/Adblade sought to participate in an F.T.C. hearing relating to truthful disclosures in advertising.
Following the filing of the lawsuit, Congoo/Adblade was ordered to preserve all written communications. Critically, many of the instant messenger communications of Rafael Cosentino, one of the authors of the “review”, were never preserved.
The management of Broadspring was not able to determine the true extent of the defamatory statements and who they were issued to until well after the end of the discovery phase of the lawsuit. This was because Adblade designated a large portion of their documents as ‘Attorney’s Eyes Only” (AEO). Ultimately, the Court determined that Congoo/Adblade and their attorneys abused this privilege to such an extent that they were forced by the judge on the case to re-designate many of the documents. For these discovery violations — the failure to preserve documents and the abuse of the AEO designation — Congoo/Adblade, Ashraf Nashed and Rafael Cosentino had to pay Broadspring more than $85,000 in sanctions.
The suit finally went to trial in January of 2015. A unanimous jury found that Congoo/Adblade and Rafael Cosentino had in fact defamed Broadspring on multiple occasions. The jury also found by clear and convincing evidence that they had acted with malice, oppression or fraud and, accordingly, awarded punitive damages against Congoo/Adblade as well as its two executives, Ashraf Nashed and Rafael Cosentino.