McGraw-Hill Cos., the target of federal and state fraud suits over credit ratings, sued Tennessee claiming its Standard & Poor’s unit’s free-speech rights are threatened by a state consumer-protection law.
“Credit ratings are fully protected by the First Amendment,” McGraw-Hill said in a five-page complaint filed yesterday in federal court in Nashville. The company is seeking a court order barring the state from applying the Tennessee Consumer Protection Act against credit-rating activities.
Tennessee today joined more than 12 states and the federal government in suing New York-based S&P for allegedly making misleading statements about residential mortgage-backed securities that helped precipitate the financial crisis of 2008.
Tennessee sued McGraw-Hill and Standard & Poor’s in state court in Nashville. The U.S. Justice Department sued the companies yesterday in federal court in Los Angeles.
McGraw-Hill said in its complaint that the Tennessee law would impose liability on S&P without first requiring proof that the company had made a statement “with knowledge of its falsity or with serious doubts as to its truth.”
Jeffrey Hill, senior counsel for Tennessee Attorney General Robert Cooper, said in a phone interview today that the McGraw-Hill claims parallel defenses it has raised in litigation with Illinois and Connecticut. He said the state will ask the court to dismiss the case.
“The right forum for the lawsuit is the state court,” he said.
The company’s case is McGraw-Hill Cos. v. Cooper, 13-cv-89, U.S. District Court, Middle District of Tennessee (Nashville). The state’s case is State of Tennessee ex. rel. Cooper v. McGraw-Hill Cos., 13-c-506, Davidson County, Tennessee, District Court for the 20th Judicial District (Nashville).