Also known as: disparagement of business · business disparagements · trade libel · commercial disparagement · product disparagement · injurious falsehood
Written by attorneys · grounded in primary & secondary sources — see below
A tort imposing liability on one who publishes a false statement disparaging another's property or business interests. The plaintiff must prove falsity as part of the prima facie case along with fault consisting of knowledge of falsity, reckless disregard, or ill will. Liability extends only to pecuniary loss that results directly from third-party conduct induced by the falsehood or to reasonable expenses incurred to counteract the publication.
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Terry sent false bulk text messages to Valley Harvest stating that Black Grain's seeds had failed germination tests. Valley Harvest canceled its season order and warned neighboring farmers, causing Black Grain to lose all repeat business for the planting season. The messages were a substantial factor in the cancellations because recipients acted immediately and expressly cited the false statements, with no independent rule cutting off liability.
Scott posted a false claim that Highland Bistro caused a mass food-poisoning outbreak. North Restaurant and other long-term clients canceled events within forty-eight hours, expressly citing the allegation and producing $180,000 in lost revenue. The loss consisted of direct pecuniary harm from client conduct plus the costs Highland Bistro incurred to counteract the publication.
Star Sustainability distributed a report to Noon Environmental's clients stating that the firm manipulated sampling results. The report's underlying facts were accurate even though the overall implication was disputed. Because the facts stated were true, Star Sustainability incurred no liability for injurious falsehood despite the resulting contract cancellations.
A procurement officer emailed State A's contracting office that Contractor Corp routinely lied about minority subcontracting goals. State A staff placed an internal summary of the email in the specific highway project file and removed Contractor Corp from the shortlist. Contractor Corp must prove that State A understood the statement as bearing on its interests in the pending bid.
Marilyn sent Delta Museum a dossier containing false statements that Central Museum had sold forgeries. Delta received the dossier the same day an independent appraiser questioned provenance and later canceled all transactions. Because the appraiser's concerns alone would have caused the cancellations, the false statements were not a substantial factor in the pecuniary loss.
MediaWatch reported that Prairie Herald had retracted multiple stories for inaccuracies. Several advertisers canceled campaigns during a broader decline in print advertising. The false report remained a substantial factor in the cancellations even though general market forces also influenced the decisions.
The plaintiff must plead and prove falsity as part of the prima facie case. This differs from defamation, where falsity is presumed and truth is an affirmative defense. The requirement flows directly from the elements of injurious falsehood.
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The defendant is subject to liability only if the plaintiff shows the defendant knew the statement was false, acted with reckless disregard as to its truth, or acted with ill will or intent to interfere. Mere negligence is insufficient.
…388 U. S., at 170 (opinion of Black, J.). Such a rule would, indeed, obviate the fear that the prospect of civil liability for injurious falsehood might dissuade a timorous press from the effective exercise of First Amendment freedoms. Yet absolute protection for the communications media requires a total sacrifice of the competing…
…opinion Opinion of Justice Stevens An unusual metaphor in a critical review of an unusual loudspeaker system gave rise to
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Recovery is limited to pecuniary loss that results directly and immediately from third-party conduct induced by the falsehood, including impairment of vendibility, plus expenses reasonably incurred to counteract the publication such as litigation costs.
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The publication is a legal cause if it is a substantial factor in bringing about the pecuniary loss and no independent rule of law relieves the publisher of liability because of the manner in which the loss occurred. Preexisting client dissatisfaction does not automatically defeat causation when the falsehood supplies the decisive impetus.
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Yes. The publisher is not liable if the facts stated, or the facts implied as justification for any opinion, are true.
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When properly raised, the plaintiff must show that the recipient understood the communication as applicable to the plaintiff's legally protected interests affected by the falsehood rather than as abstract background information.
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