In today’s competitive market, a business’s reputation is its lifeblood. It can draw in more customers than any advertising campaign. Conversely, reputational harm can cripple revenue and threaten a company’s survival. Fortunately, businesses have legal avenues to combat false and damaging statements made by competitors, ex-employees, or unhappy customers. Given the complexity of these cases, business owners need a clear understanding of business defamation before pursuing litigation.
Understanding Business Defamation
Black’s Law Dictionary defines “business defamation” as the damaging of a business by a false statement that tends to diminish the reputation of that business. Defamation law, however, is primarily grounded in state law, so, depending on the state, terms and definitions vary, including trade defamation, trade libel, commercial defamation, trade disparagement, product disparagement, and injurious falsehood.
In Florida, business defamation cases generally fall into two torts: “defamation” (including defamation per se and defamation per quod) and “injurious falsehood.” The primary difference between them lies in the injury. Defamation protects against a range of losses from false published statements, including general reputational harm, while injurious falsehood focuses on economic interests, such as loss of sales or property value. In Florida, “business defamation” typically refers to defamation against a business rather than an individual.
For example, in 2011, AstroTel, a former small telephone and Internet provider, filed a lawsuit against Verizon alleging that Verizon caused service issues for AstroTel subscribers and blamed those issues on AstroTel, advising customers to switch to Verizon for better service. AstroTel lost service contracts and revenue, eventually leading to bankruptcy. The Middle District of Florida originally found that AstroTel’s business defamation claims stated a cause of action, but Verizon ultimately prevailed on summary judgment because AstroTel failed to prove third-party publication of defamatory statements.
Business defamation, however, comes in all shapes and sizes. For example, years ago, we represented a child-care company targeted by an Internet smear campaign by an ex-husband of one of its employees, who had maliciously published that the company employed prostitutes and drug addicts to look after children. In another case, we represented a dentist who was defamed online by a former patient who falsely accused the dentist of physically pushing her son out the door of the dentistry.
Elements of a Business Defamation Claim
To pursue a business defamation claim, a business must establish, generally:
- Publication: The defendant published the statement to a third party.
- Falsity: The statement is false.
- Fault: At least negligence when dealing with a private person, or “actual malice” when dealing with a public figure.
- Actual Damages: Unless the statement is defamatory per se, in which damages are presumed.
- The statement must harm the reputation of the plaintiff, lowering their estimation in the community or deterring others from associating or dealing with them.
To establish the tort of injurious falsehood, a plaintiff must show:
- False Statement: The statement about the plaintiff’s products or business is false.
- Publication: The false statement was published to a third party.
- Malice: Intent to cause financial loss or reckless disregard of the consequences.
- Financial Loss: Demonstrable financial loss resulted from the statement.
It’s crucial to note that a review or statement that is negative yet truthful will not constitute defamation. Because falsity is one of the elements of defamation, truth becomes an absolute defense. Business owners should ensure they can objectively prove the falsity of the damaging statement. For example, in the case where the dentist was accused of shoving her patient’s son, our client provided security camera footage disproving the allegation. Proof does not always need to be on video, however; witness testimony and admissions from another party can also serve as evidence.
Even if a statement is not entirely accurate, it may not be defamatory due to the “substantial truth” doctrine. This doctrine asserts that a statement is considered true if the “gist” or “sting” of it is true, despite minor inaccuracies. Courts may overlook small errors in detail if the core message is accurate.
Proving the other elements of Business Defamation
Proving that a defamatory statement was published is often straightforward. Evidence can include showing “likes” or “views” on the website where the statements were published or testimony from individuals who heard or read the defamatory remarks. However, demonstrating that the statement caused reputational damage can be more challenging. Typically, this involves showing a loss of customers or a decline in revenue. While reputational damage can be presumed in libel per se cases, the court or a jury is not required to award damages of more than $1; as such, proving actual damages can ultimately be helpful.
This proof of damages is where expert witnesses come in, who can provide an opinion to support a business’s claim for damages. Expert economists can quantify the financial impact of the defamatory statements by analyzing changes in sales, customer behavior, and market position. They provide a detailed assessment of how the defamatory remarks directly led to financial losses. Unfortunately, expert witnesses can be costly, adding an additional financial burden to the already complex litigation process.
Another measure of damages that can be helpful in defamation cases involving intentional and malicious defamation is punitive damages, which are intended to punish the wrongdoer. Florida courts may award punitive damages in a libel action where there is a showing of “ill will, hostility, or an evil intention to defame and injure.” Punitive damages enable the plaintiff to recover based on the severity and maliciousness of the defendant’s actions.
Due to the complexity of these cases and the relatively short statute of limitations for defamation claims (two years in Florida), it is crucial to act promptly.
The Importance of Experienced Legal Representation
Conducting a thorough pre-suit investigation can be daunting, which is why enlisting an experienced defamation attorney is invaluable. Business defamation cases can be intricate, and their success often hinges on careful legal presentation. Attorney Conlin is skilled at protecting businesses through defamation litigation to ensure that their reputations remain intact. If you need assistance with your business defamation matter, feel free to contact us or call us at 407-965-5519 to discuss your case.
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