Ryan General Counsel John Smith said the Dallas-based tax services provider sued USA Today and parent company Gannett Co. because the media company published allegedly defamatory articles about Ryan’s business practices but never disclosed in its articles that Gannett employed Ryan to identify potential tax savings and then failed to pay for its services.
In a 48-page complaint filed Monday in Montgomery County, Texas, Ryan accuses the national newspaper chain of defamation, breach of contract, unjust enrichment, quantum meruit, suit on a sworn account and fraud. The lawsuit asks for actual and punitive damages as well as attorneys’ fees.
“We cannot allow a major news organization to misrepresent our business, especially considering they were benefitting from Ryan’s tax services which they failed to disclose in their reporting,” Smith told The Texas Lawbook. “Ryan seeks to set the record straight.”
Gannett Chief Legal Officer Polly Grunfeld Sack and Gannett Chief Litigation Counsel Edwin Larkin declined to respond to questions submitted by The Lawbook.
“We do not comment on pending litigation,” Lark-Marie Anton, a communications executive with Gannett, stated in an email.
To lead its lawsuit, Ryan general counsel John Smith hired Kasowitz Benson Torres partner Constantine “Dean” Pamphilis and associate Steven Owens, both located in Houston, as well as New York partner Edward McNally.
According to the lawsuit, USA Today retained Ryan in 2019 to look into tax savings for the paper, and after Ryan identified tax savings, USA Today claimed it did not want to pursue them but later did so its own, pocketing more than $2 million in savings without paying Ryan its fee.
“USA Today secretly pursued the refunds, going behind Ryan’s back in order to breach the contract, pocketing the entirety of Ryan’s fees,” the lawsuit says. “USA Today hid the fact of their secret tax savings from Ryan. And USA Today hid the fact that they were secretly a client of Ryan’s from their readers, and from the world.
“In similarly reprehensible and utterly hypocritical conduct, having secretly pocketed Ryan’s fees, Gannett then published articles in USA Today, which is the most widely circulated newspaper in the U.S., that falsely claimed that Ryan — in pursuing the same tax savings for others as they had for USA Today — was somehow participating in business practices that were criminal, corrupt and unethical,” the lawsuit says.
Smith, who previously clerked for U.S. Supreme Court Justice Samuel Alito and served as a lawyer in the White House for President George W. Bush, said Ryan “ethically and vigorously advocates” for its “clients’ interests to achieve a purpose in which we strongly believe.”
“That purpose is not to avoid taxes but to ensure that taxes are properly administered under the law,” said Smith, who previously worked as a senior lawyer at Raytheon Technologies, where he specialized in cybersecurity and privacy law matters. “When our integrity is falsely attacked, we will do what is right and defend our reputation.”