The U.S. Supreme Court this week decided to overturn a $1.2 million judgment in a defamation case—marking a victory for local law firm Fafinski Mark & Johnson and its client.

The Eden Prairie-based law firm began representing Air Wisconsin Airlines Corporation in 2007, in a case that largely focused on whether an airline should be protected from lawsuits after reporting a security threat that turns out to be a false alarm.

The Lawsuit

At the center of the case were defamation claims that William Hoeper, a former Air Wisconsin pilot, made against his former employer.

After Air Wisconsin ceased flights from Hoeper's home base using the aircraft he was certified to fly, he needed to obtain certification for a new aircraft in order to retain his job, according to court documents. But he repeatedly failed the test and during his final attempt allegedly grew angry and cursed at the administrator.

Hoeper, who was trained to carry a firearm in the cockpit, was then scheduled to take a passenger flight to Denver, and Air Wisconsin officials were unsure if he had a gun with him, according to court documents. So a company official notified the TSA that he may be a security threat, and Hoeper was removed from the plane and questioned. He was then released and took another flight later that day, although he lost his job with Air Wisconsin.

Hoeper subsequently sued the airline for defamation.

A federal transportation law passed in the wake of the September 11 terrorist attacks grants broad immunity to airlines from lawsuits when airlines voluntarily report suspicious activities—except when such reports are known to be false or are made with disregard for whether they're true. The idea behind the law was to encourage airlines to report any suspicious behavior.

A Colorado court, however, ruled in favor of Hoeper on his defamation claim, finding Air Wisconsin was not immune from such charges and awarding Hoeper $1.2 million. Fafinski Mark & Johnson brought the case to the Colorado Court of Appeals, which upheld the original verdict, and then the Colorado Supreme Court, which also upheld the lower court's ruling.

The U.S. Supreme Court's Decision

The U.S. Solicitor General Donald Verrilli then agreed to join Air Wisconsin in urging the U.S. Supreme Court to take up the case, and the high court made the rare decision to hear it.

The case was argued before the U.S. Supreme Court last month, and the court issued its decision this week. In its opinion, the court ruled that airlines like Air Wisconsin are immune from such lawsuits when the allegations are substantially true, and that Air Wisconsin was thus entitled to immunity. (Read the high court's complete decision here.)

Fafinski founding shareholder Donald Mark, Jr., who worked on the case, told Twin Cities Business that the U.S. Supreme Court's decision ensures that Air Wisconsin will no longer be required to pay the $1.2 million. The company had paid a “small percentage” of the overall judgment in the form of a bond, while payment of the full sum was delayed pending the appeals process. Mark said that Air Wisconsin will now be reimbursed for its bond payment.

Mark described the high court's decision as “a victory for the flying public,” saying it provides confirmation that the law designed to encourage airlines to report suspicious activities will be upheld. The case was “precedent-setting” and is likely to be referenced in future air security claims, he added.