Dove Audio Inc. said Thursday that a director resigned after reading a shareholder letter critical of the company's management, and the company sued the investor for libel.
The Beverly Hills-based book publisher has filed suit in Los Angeles Superior Court against Chicago investor Greg T. Buccholz and his firm, Court Capital, seeking $25 million in damages.
The suit says Buccholz wrote to Dove Audio's directors, investment bankers and others, falsely accusing Dove Chief Executive Michael Viner of incompetence, lying and violating Securities and Exchange Commission rules. It cites the letter as predicting Dove may go bankrupt by the end of the year, a charge the company denies.
Because of the letter, one unnamed outside director quit and another won't stand for reelection at the Oct. 30 annual meeting, the suit says.
Buccholz said he owns about 10,000 Dove shares.
"I'm long on the stock," he said in a brief interview, adding that the letter "caused more ruckus than I'd planned for." He declined further comment.
Viner and Dove's investor relations chief did not immediately return calls. The suit also accuses Buccholz of interfering with its relations with investors and potential underwriters.
The spat is the latest in a series of economic and legal battles at Dove.
The company's shares have dropped from a high of $14.625 on April 1 to close Thursday at $2.375, down 6.25 cents on Nasdaq.