Why is Defamation Dangerous?
The tort of defamation occurs when a person makes a false statement purported as fact as to cause injury to a third party’s public reputation. Defamation includes both written (libel) and spoken (slander) statements.
The dangers of defamation in today’s technology driven ecosystem threaten small businesses more than ever before. With the rise of social media and online platforms such as Google reviews, one bad review or negative comment has the potential to create a serious and lasting impact on small businesses’ reputation. New Jersey courts have recognized the reputational harm that can result from disparaging online statements. For example, in Goldhaber v. Kohlenberg, the court found liability where the defendant posted a disparaging message about the plaintiff’s business in an internet newsgroup. 395 N.J. Super. 380 (2007).
The impact of defamation on small businesses can be detrimental. Defamation has the potential to destroy a business’s reputation, resulting in a loss of customers and revenue. Competitors may also attempt to gain an unfair advantage by spreading false statements about a rival business. In Senna v. Florimont, the court upheld liability where employees of a competing business shouted accusations of consumer fraud and swindling over a loudspeaker to divert customers away from the plaintiff’s amusement business and toward the defendant’s establishment. 196 N.J. 469 (2008).
Furthermore, business operations can be negatively impacted by defamatory statements by destroying team morale and distracting employees from their daily duties. Employee and former employee social media activity can create significant reputational risks. In Hoffmann v. Clark, an ex-employee was held liable after posting statements on social media accusing the employer of being a “fraudster and a thief.” 975 N.W.2d 656 (2022). As a result, not only can a business’ reputation be tarnished, but the quality of the product or service they offer can dwindle as well.
Understanding Defamation
Defamation is a false statement purported as fact that causes injury to a third party’s public reputation.
Libel is defamation that occurs through written statements
Slander is another type of defamation that occurs through verbal statements.
The elements of defamation vary from state to state. However, the common elements to prove prima facie defamation include 1) a false statement purporting to be fact; 2) publication or communication of that statement to a third person; 3) negligence; and 4) damages. (https://www.law.cornell.edu/wex/defamation)
Privileges and Defenses:
- Truth is generally regarded as a complete defense to defamation claims.
- Absolute privilege is another complete defense to defamation. This includes statements made by witnesses during judicial proceedings.
- Qualified privilege allows a person to make a statement that would usually be considered defamatory, but due to particular circumstances, such as legislative proceedings, the statement is protected. However, this does not apply to situations where the statement was made with actual malice.
Defamation Law in New Jersey
Generally, NJ follows the same standards established federally and within other states to prove prima facie defamation. However, there are a couple of differences unique to NJ. In New Jersey, Anti-SLAPP laws prevent frivolous claims by creating a vehicle for defendants to quickly dismiss meritless lawsuits that target individuals for exercising their constitutional right of free speech.
Public and private figures are held to different standards of causation. Public figures are those who have fame, prominence in notoriety within society such as politicians and celebrities. Private figures are considered those not known to the general public. If the plaintiff is a private figure, the standard of causation for the defamation is negligence and must be proven by a preponderance of the evidence. McLaughlin v. Rosanio, Bailets & Talamo, 331 N.J. Super. 303 (2000); Senna v. Florimont, 196 N.J. 469 (2008). Public figures on the other hand must prove that the publisher acted with “actual malice”. DeAngelis v. Hill, 180 N.J. 1 (2004), McLaughlin v. Rosanio, Bailets & Talamo, 331 N.J. Super. 303 (2000). Under the actual-malice standard, the plaintiff must prove by clear and convincing evidence that the publisher either knew the statement was false or published it with reckless disregard for its truth. DeAngelis v. Hill, 180 N.J. 1 (2004), Gray v. Press Communications, LLC, 342 N.J. Super. 1 (2001).
The burden of proof for small business owners depends on whether they are considered public or private figures, and whether the disputed statement involves a matter of legitimate public concern. However, even if a small business and its owner are considered private figures, a defamation plaintiff must meet the heightened actual malice standard of proof if the speech concerns certain matters of legitimate public concern. For example, matters of public concern can include consumer fraud, highly regulated industries, health and safety, and voluntary exposure to public scrutiny.
The statute of limitations in New Jersey is stricter than other jurisdictions. In New jersey, the one-year statute of limitations for defamation begins strictly at the time of first publication, not when the plaintiff ultimately discovers the defamatory statement. In contrast to some jurisdictions, New Jersey courts have consistently rejected the application of the “discovery rule” to defamation claims which allows an injured party to toll the statute of limitations until they discover or reasonably should have discovered the basis for an actionable claim. § 1.22 Commercial Defamation. Moreover, New Jersey courts have declined to extend the continuing tort doctrine to defamation claims because defamation is based on a singular act of publication. Thus, the limitations period cannot be extended by alleging a continuing course of conduct.
New Jersey follows the single publication rule for mass publications. Under this doctrine, a plaintiff has a single cause of action that arises at the first publication of an alleged libel, regardless of the number of copies distributed, sold, or viewed. This rule applies to internet publications, meaning that the one-year statute of limitations runs from the date of the initial publication of the online content and does not restart when a webpage is subsequently viewed, provided the content remains unchanged.
While the one-year statute of limitations is strictly applied, it is an affirmative defense that can be waived by a defendant if not timely asserted.
Conclusion
A business’ reputation is one of the most important assets it possesses and should be protected with the upmost care. A poor reputation can directly lead to reduced revenue, poor employee performance, and a dwindling customer base.Business owners that have been impacted by defamation should reach out to an attorney as soon as possible to reduce further damage.
If you have any questions regarding defamation, reach out to a local NJ attorney for a consultation. Subscribe below for more tips on business reputation management!
