5 Elements of a Business Defamation Claim

When a person makes a false statement about an individual or business, and the statement leads to financial harm, the business may sue the person for defamation. Slander refers to spoken statements that besmirch a person’s reputation or that of a business. Written statements that smear a person or business with no basis in fact fall under the category of libel. A person or business retains the right to file a defamation lawsuit, but the elements involved differ.

Personal defamation cases often revolve around a false statement made that causes damage to the person’s reputation or their standing in the community. When a business claims defamation, however, it must show the statement negatively impacted their financial interests, either by leading to a loss of business or affecting the company’s credit. If a person or business feels they have been a victim of defamation, they might find they need a new lawyer to assist them in seeking justice. What should a person know before moving forward with a defamation case?

The First Amendment

People might believe they can say or write anything they want to, as the First Amendment guarantees freedom of speech and the press. If you want to learn more about the First Amendment and how legal professionals approach cases concerning free speech violations, click here. While United States courts have a high standard in proving defamation, men and women find they cannot make false statements or abuse these rights to punish a person or business. The United States Supreme Court decided this matter in Near v. Minnesota, 283 U.S. 687, 708 (1931).

Proving a Business Defamation Case

Each state establishes the requirements for a defamation claim. Business owners must ensure they know these requirements before proceeding. However, certain elements remain common across states, which is helpful to anyone determining whether they should proceed.

A False Statement of Fact

What makes up a defamatory statement? A defamatory statement is a false statement that exposes a person to ridicule, contempt, or hatred. In addition, the statement may lead to the person or business being shunned or harm the business in some other way. Offensive statements don’t qualify as defamatory ones, and courts look at the full context of the statement before deciding if the statement is defamatory.

Certain situations arise in which a business has a reputation that is so damaged a statement cannot do more harm, according to many courts. However, this situation doesn’t occur very often. A person making a false statement cannot rely on using this defence.

Trade libel refers to situations where the defamatory statement focuses on the goods or services of a company. Property rights receive protection under trade libel, but not the company’s reputation. The court makes this distinction because a reputation of an organisation cannot sustain damage, but their financial interests can when someone disparages the services or products.

Opinions don’t fall under the category of defamatory statements. There’s no way to prove a person’s opinion is true or false. The court looks at the context in which the person made the statement and the substance to distinguish between opinion and factual assertion.

Publication of the Statement

A business claiming they are a victim of defamation must show the individual made the statement to the public. Courts refer to this as the publication of the statement, although this doesn’t mean the statement must come in written form. One person making the statement to another person verbally still qualifies as defamation. However, when a person makes a defamatory statement, they must share it with at least one other person. What does this mean?

A person might post a video on the internet besmirching a company they did business with. To qualify as defamation, at least one other person must see the video. If the defendant posts the video and nobody view it, courts don’t view this as the publication of the statement. The defendant has not shared the information with others, so the business doesn’t suffer harm. Business owners might wish to consult with an attorney to see if the publication of the statement rises to the level of defamation.

Fault

Each jurisdiction establishes the standard for proving a defendant is at fault in a defamation suit. Additionally, this may depend on the plaintiff, as a personal defamation suit differs from one involving a business. When proving a personal defamation case, the plaintiff must show the defendant was reckless regarding the statement’s truth. When the individual about whom the statement was made is a public figure, the burden of proof increases. The plaintiff must then show the defendant knew the statement was false or didn’t care whether it was true or false when publishing the statement. Courts refer to this as actual malice, and this ruling came as part of New York Times Co. v. Sullivan, 376 U.S. 254, 280 (1964).

While this ruling applies to public figures, many jurisdictions use the same standards in cases involving a business. The business must show the person who made the statement did so knowing it was false or acted recklessly when they published the statement. If the defendant made a simple mistake of fact and didn’t know it was false, the plaintiff’s case won’t go anywhere. The same holds when a person makes a statement with no intent to harm the business. A business may wish to seek legal advice when determining if they have been a victim of defamation or if the defendant will prevail in court based on the facts of the case.

Privilege in a Defamation Case

When a defendant proves a statement they made is true, the statement isn’t defamatory. In addition, current law protects any statement made as part of a legal or legislative procedure against a defamation claim. Known as privileged statements, they made these claims in a context that deserves protection. Proving the privilege is in place ends the defamation case. Why would the law make an exception in this case?

Absolute privilege involves statements such as those made in court when a person is testifying as a witness. Courts provide this protection to encourage individuals to provide open and honest testimony. The court requires the individual to testify under oath and doing so provides extra credence to any statement made. The jury then determines the veracity of the statements. Lawyers and judges receive this same protection while in court, and government officials receive similar protection when the legislative body is in session.

Qualified privilege also protects individuals from defamation cases. This privilege applies when the matter being discussed requires free communication or is of public concern. Newspaper reporters claim this type of privilege when they report on official government business, as openness and transparency remain of great importance.

Actual Damage

Economic damages remain a key component of business defamation suits. Certain jurisdictions allow businesses to file a defamation suit even if they cannot prove financial losses as long as the statements are believed to be injurious. The business may provide this proof by demonstrating it has suffered a loss of business opportunities. For instance, a business owner attempting to sell the business might find a potential buyer backs out of the deal because of the defamatory statements. If the business owner successfully proves this is why the deal didn’t go through, they will win the defamation suit.

Defamation Cases in Texas

In Texas, courts differentiate between business disparagement and defamation. Both situations involve a person spreading false information with the intent to do harm. Where the court distinguishes between the two is in the target of this harm. Business disparagement cases involve situations in which the false assertion leads to harm to the company’s economic interests. In contrast, defamation cases revolve around false statements that damage a person’s reputation, such as the reputation of the business owner or manager. The Texas Supreme Court ruled in Forbes v. Granada Biosciences (2003) that defamation actions work to protect the personal reputation of a person while disparagement claims work to protect the economic interests of the business.

As part of this case, the Texas Supreme Court outlined four elements necessary in a business disparagement case. The plaintiff must show that the defendant published false and disparaging information concerning the company and did so with malice. They need to prove the defendant acted without privilege, as described above, and their actions led to specific damages to the plaintiff. A failure to prove one of these elements will lead to the defendant losing their case in the Texas courts. Business owners often choose to hire an attorney to ensure they can prove these elements before moving forward with a defamation or disparagement suit. The attorney ensures they have a valid case and won’t be wasting their time and money filing the suit.

People need to take care when making any statement to ensure they aren’t sued for defamation. Business owners must know what steps to take when a person makes a false statement about their business. The best course of action involves speaking to an attorney to determine how to protect the company’s reputation. An owner cannot be too careful in protecting their organisation, so act promptly anytime someone makes a defamatory statement. This ensures the matter is resolved in the shortest time possible.