SmileDirectClub Sues NBC for $2.8 Billion Over Alleged Errors and Defamation

 

By John Jannarone

Orthodontics disruptor SmileDirectClub, Inc. (ticker SDC) filed a $2.8 billion defamation suit against Comcast Corporation’s NBC Universal Media and reporter Vicky Nguyen, accusing the broadcast network and its journalists of deliberately using “inaccurate, misleading and defamatory claims” in a recent segment on Nightly News with Lester Holt.

On February 13, NBC aired a Nightly News report containing more than 40 false and misleading statements about SmileDirectClub and the treatments given to patients by doctors, the Company said in a lawsuit filed in Nashville, Tennessee. The lawsuit said that the defamatory report prompted a precipitous stock-price decline that destroyed $950 million in market valuation. The company is seeking three times that amount in damages, pursuant to Tennessee’s Consumer Protection Act.

“The breadth of its misconduct is staggering,” SmileDirectClub said in the lawsuit. “NBC misled its viewers and readers about the safety of the treatment that patients receive when using SDC’s platform, the involvement of licensed dentists and orthodontists in the treatment of patients when using SDC’s platform, and the benefits that patients receive when they are treated using SDC’s platform. Incredibly, nearly everything that NBC stated and implied about SDC in its broadcast and online report was factually inaccurate.”

“We stand by our reporting and believe this is a meritless claim,” an NBC News spokesperson said in an email to IPO Edge.

The lawsuit is the latest instance of SmileDirectClub attempting to defend itself after coming under attack several times since going public last year. The attacks have come from the powerful American Dental Association, short sellers, along with what appear to be unscrupulous journalists.

Despite the attacks, SDC has managed to prevail on several fronts. A few weeks ago, BBB National Programs Inc.’s advertising division supported the vast majority of SDC’s marketing statements after rival Align Technology, Inc. (ticker: ALGN) filed a confidential complaint in an apparent effort to hurt its competitor.

“SmileDirectClub gave NBC every opportunity to retract this defamatory report and correct the record voluntarily.  NBC choose not to so. At that point, the company had no choice but to bring this lawsuit to defend its brand and the reputation of hundreds of doctors who are using SmileDirectClub’s telehealth platform to treat patients every day,” said J. Erik Connolly, Vice Chair of the Litigation Practice Group at Benesch, Friedlander, Coplan & Aronoff, and outside counsel for SmileDirectClub. “With this lawsuit, SmileDirectClub is not just holding NBC accountable for its misconduct, but it is also telling its affiliated doctors and shareholders that SmileDirectClub stands by their side and will fight to protect their interests and reputations.”

SmileDirectClub made available to NBC hundreds of pages of documents demonstrating the safety and effectiveness, and benefits, of the treatment patients receive using the company’s telehealth platform, the company said.

SmileDirectClub also said it made senior officers available to NBC to answer questions and arranged interviews with doctors who treat patients using SDC’s platform, as well as with many of the more than 750,000 patients who have received treatment.

Broadcast networks such as NBC are notorious for producing “exposes” designed to win ratings by taking very strong points of view, often resulting in reporting that is potentially biased.

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