Chapter 1-8 Business Disparagement

• Jurisdiction: United States

1-8 Business Disparagement

1-8:1 Introduction

The Texas Supreme Court has explained that "[a] business disparagement claim is similar in many respects to a defamation action, [but] the two torts differ in that defamation actions chiefly serve to protect the personal reputation of an injured party, while a business disparagement claim protects economic interests . . .

[A] business disparagement defendant may be held liable 'only if he knew of the falsity or acted with reckless disregard concerning it, or if he acted with ill will or intended to interfere in the economic interest of the plaintiff in an unprivileged fashion.'"²³¹

MUST READ CASES & AUTHORITY

Restatement (Second) of Torts §§ 623A, 629-635, 646A-652

Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762 (Tex. 1987)

Forbes, Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167 (Tex. 2003)

Waste Mgmt. of Tex., Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W.3d 142 (Tex. 2014)

In re Lipsky, 460 S.W.3d 579 (Tex. 2015)

1-8:1.1 Related Causes of Action

Defamation, Slander of Title, Tortious Interference with Existing Contract, Tortious Interference with Prospective Relations, Texas False Disparagement of Perishable Food Products Act²³²

1-8:2 Elements

(1) The defendant published false and disparaging words about the plaintiff.²³³

• The action for business disparagement is to protect the economic interests of the plaintiff against pecuniary loss, rather than the personal reputation of the plaintiff.²³⁴
• A plaintiff ultimately must prove that the defendant published false, disparaging information, but whether the words used in a publication are reasonably capable of defamatory meaning is initially a question of law for the court to decide.²³⁵
• The false and disparaging information must amount to a statement of fact.²³⁶
• "A statement is disparaging if it is understood to cast doubt upon the quality of another's land, chattels or intangible things, or upon the existence or extent of his property in them, and the publisher intends the statement to cast the doubt, or the recipient's understanding of it as casting the doubt was reasonable."²³⁷

(2) The defendant published the information with malice.²³⁸

• For plaintiffs generally, to meet the malice requirement for a business disparagement claim, there must be proof that the statements were made with knowledge of their falsity, with reckless disregard as to the statements' truth, or with ill will or an intent to interfere with the plaintiff's economic interest.²³⁹
• Public figures cannot recover for damaging statements made about them absent proof of "actual malice" which "requires proof that the defendant made the statement 'with knowledge that it was false or with reckless disregard of whether it was true or not.'"²⁴⁰

(3) The defendant published the information without privilege.²⁴¹

• "In the context of a tort such as business disparagement or injurious falsehood, only absolute privileges have relevance to the defendant. This is because the tort itself incorporates malice as an element of recovery; hence, if the plaintiff carries his burden, he likewise defeats any conditional privilege."²⁴²

(4) The publication of information resulted in special damages to the plaintiff.²⁴³

• "[P]ecuniary loss to the plaintiff must always be proved to establish a cause of action for business disparagement."²⁴⁴
• The element of special damages requires proof that the false communication played a substantial part in inducing the loss of trade or other dealings and requires plaintiff to "establish pecuniary loss that has been realized or liquidated as in the case of specific lost sales."²⁴⁵
• Out-of-pocket expenses incurred with consultants in an effort to remedy the fallout from false statements are special damages which may be recovered.²⁴⁶

1-8:3 Damages and Remedies

1-8:3.1 Actual Damages

Actual damages must be specifically pleaded.²⁴⁷ Although the jury generally has broad latitude in determining defamation damages, it must consist of more than simply stating the value of the business which has been attacked.²⁴⁸ See Chapter 10 and Chapter 11.

1-8:3.1a Loss of Sale

Damages for loss of a specific sale are recoverable.²⁴⁹ See Chapter 11, Section 11-6:3.

1-8:3.1b Loss of Credit

Loss of credit damages are recoverable.²⁵⁰ See Chapter 11, Section 11-9:1.

1-8:3.1c Loss of Business

Loss of business damages are recoverable if the plaintiff's business is destroyed.²⁵¹ See Chapter 11, Section 11-7.

1-8:3.2 Exemplary Damages

Exemplary damages are potentially recoverable for business disparagement.²⁵² See Chapter 11, Section 11-2.

1-8:3.3 Interest

See Chapter 11, Section 11-13:1.

1-8:3.4 Court Costs

See Chapter 11, Section 11-13:2.

1-8:4 Defenses

1-8:4.1 Privilege

See Hurlbut v. Gulf Atlantic Life Insurance Co.,²⁵³ discussing privilege to defamation actions...