What Are the Elements of a Business Defamation Claim?
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For a business, defamation can lead to a damaged reputation—which in turn can lead to loss of customers, revenue, and even bankruptcy. If your business is the target of defamation, it is critical to act immediately. To succeed in a business defamation claim, you must generally prove the following four elements:
- A false statement was made about the business,
- The statement was communicated or published to a third party,
- The statement was made with at least a negligible level of intent, and
- The statement caused damage to the business’s reputation.
At Minc Law, we dedicate our practice to online defamation. We have helped our business clients deal with defamatory attacks, fake and negative consumer reviews, consumer complaints, disgruntled employees, and social media attacks.
We pride ourselves in educating and empowering victims of business defamation to better understand not only their legal rights but the remedies available. In this article, we explore the definition of business defamation, the requirements for bringing a business defamation lawsuit, possible damages, and potential defenses to such a claim.
What is Business Defamation?
Defamation, also known as ‘defamation of character’, is defined as a false assertion of fact communicated to a third party that causes harm to another’s reputation. Defamation is a claim available to both individuals and businesses—and just like individuals, businesses have legal claims and remedies available to them.
Businesses can claim defamation when they are the target of false assertions of fact about their business. For example, such situations might involve:
- False reviews on consumer review sites,
- Fake reports or reviews on professional review and/or networking sites, and
- False reports or complaints on complaint websites.
Can a Business Sue For Defamation?
Businesses have the same rights to sue for defamation as individuals do. In fact, businesses have the additional ability to make specialized claims for damages and relief that are not available to individuals under traditional libel laws.
Common business defamation claims include:
- Injurious falsehood – also known as business disparagement, and
- Unfair or deceptive trade practices.
We explain more about each type of claim below.
When a business can sue for defamation depends largely on its structure. Meaning, as long as the business or organization is a formalized business entity, incorporated with a state to do business at the time the defamation occurs, it has the right to sue. For instance, corporations and partnerships can generally sue for defamation when a defamatory statement influences the public from interacting with the company. However, a general business is operating generally and is not incorporated as a formally registered business entity, it cannot.
Likewise, defamatory statements made against individual executives, owners, or partners are not generally considered defamation against partnerships and corporations themselves. A defamatory statement that harms an individual’s reputation but has no effect on the business’s bottom line is not considered grounds for a business to sue for defamation. The individual would need to file a defamation suit on their behalf.
Can a Not-For-Profit Corporation Sue For Defamation?
Like a traditional business, a not-for-profit corporation also has the right to sue for defamation. If the defamatory statement stops the not-for-profit corporation from being able to raise funds from the general public, the corporation is likely able to file a defamation lawsuit against the perpetrator.
How Does Defamation Affect a Business?
It may be a commonly heard phrase, but the idea that “all press is good press” is not always true. Defamation can affect a business in very real ways. For example, business defamation can lead to:
- Decreased foot traffic and customers,
- Loss of advertising and sponsorships,
- Loss of reputation in the public eye,
- Reviewers feeling more comfortable leaving negative reviews of the business,
- Lower employee morale,
- Difficulty retaining quality employees and talent,
- Damaged CEO reputation,
- Decreased bottom line, and
- Having to close the business’s doors for good.
What Are the Requirements For Bringing a Business Defamation Claim
When attempting to prove business defamation, it is critical to understand each of the key elements that comprise a valid claim. Below, we examine the elements of business defamation, injurious falsehood, and unfair and deceptive trade practices.
Keep in mind that the elements of defamation are not the only factors that must be considered to successfully prove a business defamation claim. You must also take into account defenses, privileges, and other rules that might cause a valid claim to fail. These factors are addressed in greater detail in the next section.
What Are the Four Elements of Business Defamation?
A claim of business defamation requires the same elements as an individual defamation claim. While the legal definition varies from state to state, a plaintiff (whether an individual or a business) must generally prove the following four elements to bring a successful claim of defamation.
1. A False Statement Was Made About the Business
First, to be considered defamatory, the statement needs to be an untrue statement of fact. It must be both unsubstantiated and unprotected under the law—and a reasonable person must understand that the statement is about the plaintiff or business.
2. The Statement Was Communicated to a Third Party
Next, the false statement must have been published to a third party. A statement that was only shared between the plaintiff and publisher does not qualify as defamation.
3. The Statement Was Made With at Least a Negligent Level of Intent
The plaintiff must be able to demonstrate that the defendant acted negligently. In other words, they did not act with the reasonable care an ordinary person would take in a similar situation.
4. The Statement Caused Damage to the Business’s Reputation
Finally, the false statement must have caused damage to the plaintiff’s or business’s reputation. Such damage to an individual might be financial loss, mental distress, or physical harm. When it comes to a business, the damage will generally be a negative impact on the business’s reputation or other identifiable losses to the business’s bottom line.
Elements of Injurious Falsehood
Injurious falsehood is otherwise known as business disparagement or commercial disparagement. It is defined as a false and malicious statement about the plaintiff that causes damage, expense, or harm to a business. More specifically, injurious falsehood is commonly sorted into one of three subcategories:
- Trade libel/product disparagement;
- Food libel/disparagement statutes (“veggie libel laws”); and
- Slander of title.
What Are the Elements of Trade Libel?
Trade libel is a false statement made to a third party that causes damage to the victim’s service or product (as opposed to their reputation or property). To succeed in a trade libel claim, a plaintiff must generally prove the following elements:
- A false statement was made regarding the plaintiff’s product or goods;
- The statement was published to a third party;
- The statement was “of and concerning” the plaintiff’s product or goods;
- The plaintiff suffered special damages as a result of the statement; and
- The statement was published with malice by the defendant.
What Are the Elements of Food Disparagement?
Veggie libel (otherwise known as food libel or food disparagement) laws protect producers and manufacturers of food from defamatory statements about their food products.
A successful veggie libel claim must contain the same (above) elements as trade libel. The only difference is that to qualify as veggie libel, the defamatory statement must assert that the business’s food products are unfit for human consumption.
Veggie libel laws are statutory in nature and, as of September, 2021, are only passed in thirteen states. These states include: Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi, North Dakota, Ohio, Oklahoma, South Dakota, and Texas.
For example, Ohio’s veggie libel law may award compensatory and punitive damages, reasonable attorney’s fees, and costs of the action, to any producer of perishable agricultural or aquacultural food products where “…the disseminator knew or should have known that the information was false.”
Additionally, “…any person who intentionally disparages a perishable agricultural or aquacultural food product for the purpose of harming the producers of that product, in addition to any award of punitive damages, is liable in an amount up to three times the amount of compensatory damages awarded…’
What Are the Elements of Slander of Title?
Slander of title is a common-law tort involving a false statement that was published to a third party and caused financial damage to the victim’s title of a property. To successfully bring a slander of title claim, a plaintiff must prove the following elements:
- A false statement was made about a person or entity’s property;
- The statement was made to a third party;
- The defendant published the statement with the knowledge or reckless disregard of the statement’s truthfulness;
- The defendant should have known (or reasonably believed) that the third party might rely on the statement and that it would cause financial harm to the plaintiff’s title;
- The plaintiff did, in fact, suffer financial harm to their title as a direct result of a third party’s reliance on the statement; and
- The defendant’s conduct was directly attributable to a substantial factor in causing harm to the plaintiff’s title.
For example, in some U.S. states, a slander of title claim might arise in a situation involving the filing of a false real property lien, such as a mortgage. Other common situations that may give rise to a slander of title claim include:
- False claim to a property that prevents its sale to a third party,
- Recordation of a false instrument which governs (or affects) title to a property,
- Prevention of a property auction sale on the grounds that the seller is legally not authorized to do so.
Elements of Unfair and/or Deceptive Trade Practices
An unfair or deceptive trade practice is an action intended to mislead the general public into making a purchase. Both individuals and businesses can be guilty of deceptive trade practices. According to the Uniform Deceptive Trade Practices Act (UDTPA), the following actions are considered unfair or deceptive trade practices:
- False advertising of services, businesses, and goods;
- Disparagement of goods, services, and businesses;
- Trade symbol infringement;
- Misrepresentation of the geographic origin of services or goods;
- Undisclosed substitution of other goods or services for those ordered by a customer;
- Bait and unethical advertising;
- Misrepresentation of pricing; and
- Other conduct that makes confusion or misunderstanding likely for the consumer.
While all U.S. states allow consumers to file suit to enforce UDTPA laws, procedural requirements and remedies for consumers may differ greatly across all states.
When Can You Bring a Claim of Business Defamation Against Someone?
If your business is considering filing a defamation lawsuit, it is critical to file it before the defamation statute of limitations expires. The statute of limitations is the limited window of time between when a defamatory statement is published and when you must file your lawsuit. Businesses that fail to file their claim within the respective statute of limitations period may risk having their case dismissed altogether.
Generally, the clock on the statute of limitations starts ticking on the date that the defendant first publishes the defamatory statement. And although the statute of limitations for defamation lawsuits varies by state, most states require plaintiffs to file their defamation claim within one to three years of the statement’s publication.
Video: What is the Statute of Limitations for Defamation in the U.S.?
How Do I Sue For the Defamation of a Business?
The process of filing a business defamation lawsuit involves many moving parts. You will first need to determine whether you even have a valid defamation claim for libel or slander. At the same time, you should consider all the potential defamation defenses that the perpetrator might be able to use, such as the defense of truth or privilege.
If you and your attorney agree that filing a lawsuit is your best option, the process of suing for defamation typically follows the below pattern:
1. Decide Where to File Your Defamation Claim
The jurisdiction for the case may be affected by where the defendant lives, where your business operates, where your customers are located, or where your business has experienced loss due to the defamation.
2. Comply with All Pre-Suit Requirements
These requirements, such as giving public written notice of your lawsuit or filing an official request for correction with the publication in question, vary by state.
3. Draft the Legal Complaint
A complaint is a formal legal document that initiates the lawsuit. It lays out the legal claims, facts, and arguments to support the plaintiff’s claim against a defendant. The complaint also must include a request for relief and damages (“prayer for relief”).
For further information on filing a defamation lawsuit, we recommend reading our comprehensive blog post ‘How to File a Defamation Lawsuit’ or check out the video below.
Video: How to File a Defamation Lawsuit
How Difficult Is It to Win a Defamation Case?
The difficulty of a business defamation case depends on two factors: your definition of success, and whether you are seeking substantial amounts of financial compensation.
At Minc Law, most of our clients consider winning a defamation suit to mean one or more of these outcomes:
- Successfully removing the defamatory statement(s) from the internet,
- Obtaining monetary compensation,
- Identifying the anonymous defamer or the source of the accusations, and/or
- Obtaining a court order to remove content or a settlement that prevents unlawful damaging conduct in the future (article: What is the Average Defamation Settlement?).
For defamation lawsuits, the rate of success in the above terms is very high. However, if you are seeking very substantial amounts of financial compensation, it is much harder to “win” a defamation case because of the evidence required to prove damages and the amount of time and resources to push a case all the way to trial.
To obtain substantial damages, you will likely need a large budget and the willingness to take the case to trial. You and your attorney will need to do thorough research and preparation to overcome all potential defenses to defamation, and clearly demonstrate the damages incurred to your business.
Possible Damages in a Business Defamation Lawsuit
Proving defamation damages in a business defamation suit is the fourth and final element a plaintiff or business must prove to see success in a defamation claim. Damages are a monetary sum that the law grants to the plaintiff as compensation for a violation of their rights.
Every state has its own guidelines that determine a business’s possible recoveries. Also, because of the highly subjective nature of the harm that a business can experience as damages, proving damages in an online defamation lawsuit is no easy feat. Proving damages is often the hardest part of any defamation case.
One difference between standard defamation and business defamation is that businesses cannot claim mental anguish or emotional distress as a form of damage. However, a business can still claim reputational harm.
What Damages Can You Win in a Business Defamation Lawsuit?
In most business defamation cases, there are a few types of damages that a business may be eligible to recover, including:
- Actual and/or compensatory damages;
- Special damages;
- General damages;
- Nominal damages; and
- Punitive damages.
Actual damages, also known as compensatory damages, are reimbursements for real losses incurred by the plaintiff. They can take the form of special damages or general damages.
These damages reimburse a corporation or partnership for financial losses they suffered as a result of the reputational injury caused by the defamation. These losses might include a loss of revenue or a lowering of the company’s stock value.
These damages reimburse a business for more abstract injury, such as reputational harm that is likely to lead to a financial loss.
Nominal damages are awarded to a business when a legal wrong occurred, but the plaintiff cannot prove the extent and nature of the loss or injury they suffered. Nominal damages typically come into play when violations of constitutional rights are involved.
Because the purpose of nominal damages is to demonstrate an acknowledgment that the plaintiff’s legal rights were violated, monetary awards are typically small.
Punitive damages are used to punish defendants for their behavior—usually due to that behavior being especially malicious or egregious. To obtain punitive damages, a business must prove that the defendant acted with actual malice or reckless disregard.
Some business defamation torts allow plaintiffs to sue for damages that may not be actionable under a normal defamation claim.
For example, a business may be able to sue for disparagement of its product. In a regular defamation case, the harm must concern the plaintiff personally. But in an injurious falsehood or slander of title claim, the business plaintiff may sue another business for damage to the plaintiff’s property.
What Damages Might You Have to Pay if You Lose a Defamation Lawsuit?
If you are the plaintiff or defendant in a defamation lawsuit, there are several costs that the process may potentially incur, including:
- Filing fees,
- Expert witness fees, and
- Attorneys’ fees—whether a provision in the client contract calls for payment, or a law specifically requires that the losing side pay the attorneys’ fees.
Under the American system, the plaintiff pays nothing in damages if they lose the case. The exception to this rule would be if there are Anti-SLAPP grounds in play. Defendants may file Anti-SLAPP motions to accuse the plaintiff of filing a meritless defamation lawsuit. If this SLAPP motion is successful, the defamation case is dismissed, and the plaintiff may be required to reimburse reasonable legal fees for the defendant.
From the perspective of the defense, loss of a defamation lawsuit could potentially mean that they are responsible for any and all damages proven at the trial, as listed above.
Considering if a state has an Anti-SLAPP law in their books is an important consideration when filing a defamation lawsuit due to the risks associated for the plaintiff (ex. Reimbursing the defendant’s legal fees).
As of August, 2021, thirty one states and the District of Columbia, have enacted Anti-SLAPP legislation. These include: Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Illinois, Indiana, Kansas, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, Nevada, New Mexico, New York, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Texas, Utah, Virginia, Vermont, and Washington.
Who Has the Burden of Proof in a Defamation Lawsuit?
Generally, the plaintiff holds the burden of proof in a defamation lawsuit. The business bringing the defamation claim must prove the standards four elements to be present in the case:
- A false statement was made about the business,
- The statement was communicated or published to a third party,
- The statement was made with at least a negligible level of intent, and
- The statement caused damage to the business’s reputation.
Because the plaintiff must convincingly prove damages, it is recommended that you work with an experienced defamation lawsuit attorney to help you compile a thorough case and assist with expert witness services, as needed.
Common Defenses Against a Business Defamation Claim
Defamation lawsuits are often not as cut and dried as plaintiffs wish they were. It is often the case that the alleged defamer may not have done anything wrong, since there are many situations in which a defendant can avoid liability. These situations are known as defamation defenses.
What Defenses Can Be Used Against a Business Defamation Claim?
Before filing a business defamation lawsuit, potential plaintiffs should be aware of the potential defenses on which the defendant may rely. The most common defenses include:
- Statute of limitations,
- Consent, and
- Statutory defenses.
Truth & Substantial Truth Doctrine
Because defamation of character requires that the statement be false, a true statement by definition cannot be considered defamation. Truth is an absolute defense to defamation.
If the defendant is able to prove that the statement they made was true, they cannot be held liable, and the court will rule in their favor.
In some situations, a defendant may have published a mix of both true and false statements. In that case, the court must consider the substantial truth doctrine, which protects the defendant from liability for minor inaccuracies in a mostly true statement.
The court may determine that if the overall gist of the statement in question was not defamatory, even if a small portion of the statement was untrue or misleading.
When it comes to defamation law, a privilege is an individual or entity’s legal right to publish statements to a third party. Privilege is established to protect our right to freedom of speech. Of course, having the privilege to make potentially defamatory statements is based on the speaker’s circumstances.
The five types of privilege include:
- Absolute privilege,
- Qualified privilege,
- Fair report privilege,
- Statutory privilege, and
- Neutral reportage.
For further information on the five types of privilege commonly relied on in defamation cases, make sure to read our comprehensive blog post by Intake & Paralegal Manager Darcy Buxton tackling the most common defamation defenses.
Statute of Limitations & Single Publication Rule
The defamation statute of limitations dictates the window of time that the plaintiff has to file a lawsuit after the defamatory statement was made. The statute of limitations is one of the most common defenses relied on in defamation lawsuits since most jurisdictions require a defamation claim to be filed within 1 to 3 years after the statement is published.
In some high-profile cases, a defamatory news story or publication can go viral or be picked up by multiple sites. If the defamatory statement is republished, the single publication rule dictates that only the first publication of the defamatory statement matters for the statute of limitations. So the statute of limitations begins running the first time the defamatory statement is published, and consequent publications do not affect the deadline.
Consent as a Defense to Business Defamation
If a plaintiff gives their consent for the publisher to publish a statement, they cannot expect to win a defamation claim concerning that statement later.
The defense of consent may seem obvious; however, it is not always a clear-cut situation. Consent can either be implied from context or expressly given. An example of express consent might be, “I give my permission for you to publish this conversation in your news article.”
There is also the question of whether limits were placed on what could be published. Often, those giving journalists interviews say something like, “This part is off the record,” meaning that the speaker is limiting their consent for their statements to be published. If the journalist publishes that “off-the-record” content, they may no longer be able to claim the defense of consent.
Statutory Defenses That May Prevent Business Defamation Claims
Statutory defenses are rules written into law that may prevent defamation lawsuits from being brought in certain circumstances. Two common examples of statutory defenses are Section 230 of the Communications Decency Act and Anti-SLAPP statutes.
Section 230 of the Communications Decency Act
Section 230 of the Communications Decency Act immunizes internet service providers—such as Google and Facebook—from defamation lawsuits for statements published by users.
Say a Facebook user posts a defamatory statement on his Facebook page about a business. Under Section 230, that business cannot sue Facebook for defamation. Instead, the business would need to take action against the individual Facebook user.
For a more in-depth overview of Section 230 of the Communications Decency Act and explanation of why Section 230 matters not only to websites, but individuals like you as well in today’s digital landscape, we recommend checking out the video below.
Video: Why Section 230 of the CDA Should Matter to You
Strategic Lawsuits Against Public Participation, or SLAPP, refers to frivolous lawsuits used to repress free speech. Anti-SLAPP laws help prevent powerful entities and businesses from using defamation lawsuits to intimidate detractors. Anti-SLAPP laws also help prevent an excess of defamation lawsuits in the courts.
What is Actual Malice & Why is It Important in the Context of Business Defamation?
To succeed in a claim for business defamation, the plaintiff must prove that the defendant acted with at least a negligent level of intent when publishing the defamatory statement. However, if the plaintiff is a public figure or entity who wishes to recover damages, the plaintiff must prove that the defendant acted with actual malice.
The definition of actual malice is based on two requirements, which may vary from state to state:
- The publisher made a defamatory statement with knowledge of its falsity, or
- They made the statement with reckless disregard for its truth or falsity.
In the context of business defamation claims, actual malice is extremely important. If your business is well-known or the issue involves your business in a public dispute, your business could be considered a public figure.
This event raises the standard to actual malice rather than negligent intent and can make the case much harder to prove. That is why it is recommended that you have your situation evaluated by an experienced defamation attorney.
How is Defamation Tried in Court?
If your defamation case is taken to trial, the case is tried as a normal lawsuit. The trial in a defamation lawsuit usually proceeds in the following steps:
- Jury selection;
- Opening statements;
- Testimonials are given by lay and expert witnesses, and evidence is exhibited;
- Closing statements; and
- Awarding damages, if applicable.
How Can Minc Law Help You With Your Business Defamation Issue?
Online defamation can have devastating consequences for a business, whether the defamation takes the form of fake Google reviews, a false and malicious report about your business by a former employee, or a defamatory news article.
If your business has been bombarded by hostile online attacks, it is crucial to obtain professional help as soon as possible. At Minc Law, our experienced defamation lawyers can help you remove online defamation, file an online defamation lawsuit, identify anonymous online defamers, and obtain compensation for damages suffered by your business.
“Unbelievable! I am a C Suite executive who has dealt with the top law firms and Aaron, Daniel, and Kaelynn and team are superior in the quality and execution of matters than most of these firms. When I had an urgent issue arise related to defamatory content online, Aaron and his team jumped on the matter immediately and within a few days had the content down and deleted. Moreover, we have not stopped there and have initiated litigation to ensure that these are repercussions for such comments. I am writing this out of my own volition and at my urging because I would like others to know that if you have any issues with content online about yourself, you don’t have to feel helpless and can proactively identify and hold those responsible accountable. Thank you Minc Law firm. From bottom of my heart.”
Anonymous, December 11, 2020
To learn more about how we can help your company fight defamatory attacks, reach out to the Minc Law team via Chat, email, or contact form today. You can also call us at (216) 373-7706 to schedule your initial, no-obligation consultation.
Is your executive reputation in need of a boost? Uncover the keys to success in our informative article, ‘Executive Reputation Management: Strategies for Protecting and Enhancing Your Personal Brand.‘
Ohio Legislative Service Commission. Revised Code 2307.81 - Dissemination of false information about the safety of Ohio's food supply (1996).