Can my company sue for business defamation?

Adam Keilen Litigation

Yes. Corporations can sue for business defamation.

Each state has different laws regarding defamation; business defamation is a common law action based on false spoken or written statements that injure the business interests of another, thereby deterring third parties from doing business. Business defamation claims must prove that:

  • There was a false and defamatory statement concerning the business;
  • The statement was made in writing or was made verbally to a third party;
  • The fault is, at a minimum, negligent; and
  • Company damages can be shown (actionable per se or the existence of special harm).

Just remember, truth is an absolute defense to a defamation claim, so you can’t sue simply because of a negative comment or a negative consumer review that hurt your company’s reputation. Consumers and other companies are free to express facts and opinions about your company, so long as they are truthful and accurate. For example, “My personal opinion is that XYZ Corporation does a very poor job servicing their machines.” Such a statement does not give rise to a defamation claim. However, if XYZ’s competitor were to publish a false review to a third party, stating that “XYZ Corporation overcharged me, never serviced my machines, and is financially defunct – XYZ won’t be able to stay in business another month,” and as a result – XYZ’s customers cancelled their contracts – then such a statement could give rise to a lawsuit for business defamation.

In other words, people are free to criticize – so long as it is fair and accurate. Thus, statements criticizing poor service or faulty products don’t give rise to defamation claims; however, a phony review, based on facts that didn’t occur, thereby demonstrating a reckless disregard for the truth, may provide an adequate basis for a lawsuit. Also note, in some cases, businesses can be sued for merely passing along defamatory rumors, even when they were not the original publishers of the false statements – so be careful as to what is passed along/shared.

The take away. People can express their opinions and share their experiences, so long as they are truthful; however, a statement that is untruthful, unprivileged, and not based in fact can give rise to a claim for business defamation.