PORTLAND, Maine — A federal judge has ruled a defamation claim from Cate Street Capital CEO John Halle against an industry newsletter raises a trial-worthy controversy, clearing the way for further discovery in the case centering on one word.

U.S. Magistrate Judge John Nivison on Wednesday dismissed defamation claims based on three of four passages published by author Verle Sutton in his newsletter Industry Intelligence, and dismissed Halle’s company Cate Street Capital in connection with each passage.

Nivison ruled a jury should decide whether the newsletter’s mistaken use of the word “convicted” to describe the outcome of a civil legal action defamed Halle.

That decision hinged on Nivison’s conclusion “that the average reader would understand and appreciate that the use of the term ‘convicted’ suggests criminal, as opposed to civil, responsibility,” according to his order issued Wednesday afternoon.

During oral arguments in the case in August, Sutton’s attorney, Bernard Kubetz — who also represents the Bangor Daily News on legal matters unrelated to this case — argued use of the word “conviction” does not have special significance for readers without legal expertise and that the statement was “substantially true” whether Sutton had used the words “convicted” or “found liable” or “found legally responsible.”

Nivison’s ruling found that use of the word “convicted” was capable of having a defamatory meaning and should go before a jury to decide.

The passage referenced a $1 million personal judgment against Halle in a New York court.

Attorneys for Cate Street have argued that the May 2014 article harmed the company’s reputation and affected its ability to conduct its business in Maine. The East Millinocket mill Cate Street managed shut down in January 2014 and the corporate entity that owned the mill, GNP Maine Holdings, ultimately filed for bankruptcy in September 2014.

The ruling Wednesday focuses the defamation case on the single passage and single plaintiff, Halle, and clears the way for further discovery into whether the statements were actually true or false and the extent of any financial harm stemming from the statement.

Nivison ruled three other passages Sutton published — including questioning how much in management fees Cate Street charged to Great Northern, stating that “Great Northern’s slow demise might have lined the pockets of Cate Street owners, and perhaps others,” and writing company management had an “unsurpassed incompetence” — were not grounds for a defamation claim.

Darren Fishell

Darren is a Portland-based reporter for the Bangor Daily News writing about the Maine economy and business. He's interested in putting economic data in context and finding the stories behind the numbers.