Brazilian journalist expected to pay $213,000 in compensation for report as publishing company undergoes judicial reorganization

The process of judicial reorganization being undergone by the Abril Group, one of Brazil’s largest publishing groups, has led to a journalist being required to pay a hefty compensation for a lawsuit related to a report published in one of the media company’s outlets.

The usual practice in Brazil is that the journalistic company bears the costs of lawsuits related to the reports it publishes, as well as any compensation in case of conviction. However, the Abril Group’s judicial reorganization prevents the company from paying compensation in a lawsuit involving journalist André Rizek. He had his accounts blocked on July 19 and is being charged US $213,000, as journalist Juca Kfouri reported on his blog.

The Abril Group entered into judicial reorganization in August 2018, claiming debts totaling R $1.6 billion at the time. The recourse was filed by the Abril Group before the Brazilian court days after the company laid off about 800 employees, as reported by Folha de S. Paulo at the time.

The judicial reorganization means that “the indebted company gets a deadline to continue operating while negotiating with its creditors, under the mediation of the judiciary,” explains site G1. Debts incurred prior to the request for judicial reorganization are "frozen" during this negotiation. This includes compensations that the publisher is ordered to pay in lawsuits prior to August 2018, such as the lawsuit in which the publisher and Rizek were sentenced.

Abril Group entered into judicial reorganization in August 2018. (Screenshot)

Abril Group entered into judicial reorganization in August 2018. (Screenshot)

Paying the compensation then fell on the journalist. In November 2018, his and the Abril Group’s defense attorneys filed an appeal to suspend the execution of the judgment against Rizek.

They argued in their petition that while the Abril Group cannot pay compensation at the moment since it’s undergoing judicial reorganization, it is responsible for “full payment of the sentence,” as established in the Collective Labor Agreement of Professional Journalists. The Agreement states that if the journalist is prosecuted for a report, “the company will support its defense by defraying all costs until the final decision, provided that the subject matter of the case has been authorized by the company's management and does not depart from guidance it has given,” as the petition cites.

The document drafted by the lawyers maintains that such a rule “is guaranteeing the widest security and freedom for journalism professionals to carry out their activities, thus fulfilling a democratic vocation” and that, without it, “journalism would not be practiced in Brazil, that is press professionals would easily be intimidated by million-dollar legal actions, the intended compensation of which they could never afford.”

Also in November last year, an injunction was granted that suspended the execution of the sentence against Rizek, as reported by Consultor Jurídico. However, in May 2019, the São Paulo Court of Justice (TJSP) denied the appeal and ordered the journalist to pay the compensation, according to Jota.

TJSP’s decision that “the Collective Labor Agreement does not apply to the case” as it “only points to the payment of procedural expenses and not the payment of conviction,” and does not “have the power to remove court convictions in favor of people unrelated to the contractual relationship, as the aggravated [the person who filed the suit] does not participate in any of the class entities” that signed the Agreement, which are the Union of Professional Journalists in the State of São Paulo and the Union of Owners of Newspapers and Magazines of São Paulo.

In addition to this lawsuit, Rizek and the Abril Group were convicted in another lawsuit, with a compensation totalling R $350,000. This sentence, however, has not yet been enforced.

Rizek “abandoned” by the Abril Group

Although Rizek's case has been in court since 2003, it gained traction on July 18 after being reported by journalist Juca Kfouri on his blog. In the text, Kfouri accuses Abril of having “abandoned” Rizek and states that “there are more than 50 Abril journalists responding to lawsuits, all with facts prior to the judicial reorganization.”

Rizek is the first to be executed. Others will come,” wrote Kfouri, who adds that the journalist “has an official company document acknowledging that it is Abril’s debt and not his – as Abril already made public in the process – although, in practice, thanks to the judicial reorganization, Rizek is being charged.”

“All that remains is to ask: is there any security for signing a story in Abril magazines?” Kfouri questioned.

Raphael Maia, a lawyer and coordinator for the Legal Department of the Union of Professional Journalists of São Paulo, told the Knight Center that the TJSP’s decision that enforced the execution of the sentence on Rizek has “the impact of an atomic bomb” on journalists in Brazil.

"The journalist does not have the privilege to suspend the process [of execution of the sentence] because of the [judicial] reorganization of the company," Maia said. “It's a situation in which the [judicial reorganization] law protects the company and throws the employee to the lions.”

For him, a possible and immediate solution to Rizek's case is for the owner of Abril to pay the compensation. “The owner of Abril can take care of this payment and buy this credit [with the company] as an individual. That is the only way I see it, because Abril in fact, by law, cannot make this payment. As long as it doesn't pay, the lawsuit against the journalist will take its course.”

Maia added that because of this case and the judicial reorganization of Abril, the Union of Professional Journalists of São Paulo is negotiating with the Union of Owners of Newspapers and Magazines of Sao Paulo to amend the next Collective Labor Agreement to cover similar situations.

“We are amending the clause to make it clear that even in the event of conviction, the debt belongs to the company. We are also including a recommendation that the journalist's defense attorney, who in these cases also defends the company, lodges a challenge of the value of a possible conviction on behalf of the journalist so that it is limited to the specific condition of the journalist, not the company. Because otherwise the person asks for R $1 million thinking about the possibilities of the company, but condemns the journalist as well,” he said.

According to Maia, there has already been a positive sign from the employers union and it is likely that the new Collective Labor Agreement for the 2019/2020 period in the State of São Paulo will have the updated clause and include this recommendation for possible future cases.

“Complex and atypical case”

The Abril Group, in turn, told the Knight Center in a statement that the group’s companies are subject to "the effects and limitations imposed by Law 11.101/2005, especially with respect to obligations prior to the request for judicial reorganization"

"The effects imposed by the law regulating judicial reorganization are not optional, and their compliance and observance by the Abril Group must be total," the statement said.

The Abril Group also stated that Rizek "has been represented and defended for the past 16 years in all proceedings brought against him, entirely at the expense of the Abril Group, in a diligent and responsible manner."

“The effects of the judicial reorganization on the legal proceedings involving Mr. André Rizek have made the case complex and atypical, it is certain that the Abril Group has been studying possible measures with the judicial reorganization judgment to suspend the charges currently being filed against the journalist, and remains committed to finding solutions for a good outcome of this case,” the company said.

The company also said that “any repayment right of parties that are joint debtors with the Abril Group will be dealt with in the Abril Group judicial reorganization plan, and should be confirmed by decision of the judicial recovery judgment”, which should happen by August 2019.

The Knight Center asked Abril if there are other journalists who are co-defendants with the company in lawsuits related to reports published in its publications that may find themselves in the same situation as Rizek in the near future. “Abril has historically won the overwhelming majority of court cases over published stories, and the unfolding of the judicial reorganization process will allow pending cases to be resolved,” the company responded.

The Knight Center contacted journalist André Rizek, but he declined to comment on the case.

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