Business & Commercial Disparagement

• The statement is false.
• The defendant either intends the publication to cause financial loss or reasonably believes that the publication would result in financial loss for the business.
• Financial loss does in fact result.
• The publisher acts with malice. (The defendant knows either that the statement is false or acts in reckless disregard of its truth or falsity.)

As you can see, the tort of commercial disparagement is quite broad. For example, the tort covers an individual’s business reputation, such as an accusation that the business is:

• Incompetent,
• Dishonest, or
• Unethical.

The tort also covers false imputing insolvency to merchants, traders, or others in business, as virtually every business is dependent on some form of credit. Simply put, this means commercial disparagement covers statements alleging a business is likely bankrupt or unable to properly finance its operations.

But, how is commercial disparagement different from defamation of character?

Although commercial disparagement and defamation of character appear similar on their face, it’s important to remember that they are distinct and separate torts.

• Defamation is a statement of false fact damaging the good reputation of a person – it may further be broken down into libel (the written publication) and slander (the spoken publication). Defamation of character primarily focuses on the impact a statement had on a plaintiff’s reputation – impact on financial and property rights are merely supporting evidence.
• Commercial Disparagement is exclusive to businesses and cannot be filed by just anyone like a defamation claim. Commercial disparagement claims are for protecting a business’s property and financial rights as opposed to its reputation.

Brand Management Tip: Interacting with customers who air legitimate feedback is an important brand management technique. Doing so shows your business is transparent, willing to compromise, and communicative.

Let’s also take a look at a lesser known law that is a subset of commercial disparagement and referred to as food disparagement laws.

Food Disparagement Laws

Also known as “veggie libel laws” or “food libel laws” food disparagement laws allow food manufacturers, producers, and processors to sue a person or group who makes disparaging comments about their food products.

Generally, food disparagement laws have lower burdens of proof, and in some cases, shift the burden of proof to the party being sued. As of March 2018, there are only thirteen states with veggie libel laws in place, including: Alabama, Arizona, Colorado, Florida, Georgia, Idaho, Louisiana, Mississippi, North Dakota, Ohio, Oklahoma, South Dakota, and Texas.

Oprah Winfrey & The Amarillo Texas Beef Trial

As mentioned above, standards of proof can greatly differ in these cases. For example, in 1998 Oprah Winfrey, and one of her guests, Howard Lyman, were involved in a food disparagement lawsuit – commonly referred to as the “Amarillo Texas beef trial.”

In an airing of one of her shows, Oprah and her guest, Lyman, made disparaging comments about beef and its association with mad cow disease, ultimately creating a media sensation. Both Winfrey and Lyman were sued by beef feedlot operator Paul Engler and the company Cactus Feeders.

As opposed to the traditional libel burden, requiring a plaintiff prove the defendant acted deliberately and knowingly in their dissemination and publication of false statements, Texas food disparagement laws required the plaintiffs prove such statements made by Winfrey and Lyman were not “based on reasonable and reliable scientific inquiry, facts, or data.”

Ultimately, the jury found the statements by Winfrey and Lyman did not constitute libel against the feedlot operator. However, it is worth noting that Oprah no longer speaks publicly on the issue.

Ohio Libel Tip: In contrast to defamation per se, which deems certain statements as so inherently defamatory that the plaintiff need not prove damages for defamation claims, Ohio also follows the legal principle of defamation per quod, which requires plaintiffs prove special damages.

But, how are they different?

When bringing a claim of commercial disparagement, there is no need to prove damages. A common element in defamation claims is the requirement for plaintiffs to prove damages or that the statement was inherently defamatory – also known as defamation per se. To read up more on what constitutes libel and slander per se (defamation per se), check out our detailed blog post, “Is it Libel or Slander?”.

Businesses may sue for both defamation AND commercial disparagement if they so wish. However, damages may be nominal, unless specific damage to a business’s reputation or sales is evidenced.

Common damages that may be awarded include:

• Loss of reputation,
• Loss of sales, and
• Punitive damages (punishment damages) – if the conduct is egregious enough.

Ohio Defamation Law Fact: Ohio courts have jurisdiction over defendants who (1) post defamatory material online that Ohio residents view, (2) that material defames a plaintiff with Ohio domicile, and (3) the defendant knew the plaintiff’s domicile is Ohio.