Also known as: injurious falsehoods · trade libel · disparagement
Written by attorneys · grounded in primary & secondary sources — see below
A tort imposing liability on one who publishes a false statement that disparages another's property, products, or business and thereby causes pecuniary loss. The plaintiff must prove falsity, publication to a third party, and that the statement was a substantial factor in producing the loss. Truth is a complete defense.
Streamline News emailed major advertisers a dossier falsely stating that Cascade Daily fabricated its circulation figures. Several advertisers read the email and shifted their budgets to Streamline, causing Cascade substantial lost revenue and contract cancellations. Cascade sued Streamline for injurious falsehood.
NimbusCloud published a report falsely claiming that DataHaven's storage platform permanently corrupts user files. Several corporate customers, including Apex Systems, canceled pending contracts with DataHaven while citing reliance on the report. DataHaven sued NimbusCloud seeking lost profits.
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Luis Construction emailed developers photographs and lab reports accurately showing that Apex Builders had dumped asbestos-containing debris on a jobsite. Apex lost a municipal bid after the developers received the email. Apex sued Luis for injurious falsehood.
A State W procurement officer emailed State A's contracting office stating that Contractor Corp routinely lies about meeting minority subcontracting goals. State A placed an internal summary of the email in the project file and removed Contractor Corp from the shortlist. Contractor Corp sued for injurious falsehood.
Summit Clinic circulated a newsletter to insurers falsely claiming that Riverview Hospital's surgical infection rate exceeded industry norms. A large employer removed Riverview from its preferred provider network after reading the newsletter, reducing Riverview's revenue. Riverview sued Summit.
Diaz published an article falsely accusing Atlas Capital of steering clients into failing funds for kickbacks. Several institutional clients terminated their management agreements with Atlas and cited the article as the reason. Atlas sued the blog operator for injurious falsehood.
The publication must be a substantial factor in bringing about the pecuniary loss, and no independent rule of law may relieve the publisher of liability because of the manner in which the loss occurred. Multiple causes may cooperate to produce the same economic harm. The tort addresses precisely the situation in which third parties react to the falsehood by altering their economic dealings with the plaintiff.
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Yes. The publisher is not liable if the facts stated or implied as justification for an opinion are true. The plaintiff bears the burden of proving falsity as part of the prima facie case.
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Injurious falsehood protects pecuniary interests rather than reputation. The plaintiff must prove falsity, publication to a third party, and actual pecuniary loss in every case.
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Recovery is limited to pecuniary loss that results directly and immediately from the effect of the falsehood on third persons, including impairment of vendibility, and the expense of measures reasonably necessary to counteract the publication. Consequential losses such as failure to make advantageous use of money are not recoverable.
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…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…