What is Slander and What Does it Mean for Companies?
Slander, in the context of law, refers to the spoken spreading of false statements which damage the reputation of an individual or a company. It is one of the two types of defamation: slander concerns spoken words and libel concerns written or published words (such as articles or social media posts).
Both false statements represent the broader legal terminology of defamation, and accusations against an entity are only valid if the four following criteria are met: To be recognized as slander (or defamation in general) , the false statement must be untrue or misleading to the public, and it must cause harm to the subject’s reputation. The statement must identify the subject directly, whether through name or other characteristics. While verbal communication constitutes slander, libel comprises written publications intended to be distributed. This means that while both libel and slander must meet the above-mentioned criteria, slander is simply a different means of communication.
Can Companies be Slandered?
When most people think of defamation, they automatically picture a lawsuit taken out against another individual or entity, but the question of whether a company can be a victim of slanderous or defamatory actions is one that has been the root of much discussion in the legal world.
According to the Restatement of the Law 2d, Torts, under Section 561, an action can be taken against a company for the actions of its workers or officers as well as actions by third parties that create a false impression about the company. Even actions that can be claimed as accidental will constitute defamation of a business.
In the case of Auto., etc., etc., v. Van Allen in 1963, the court ruled against a manufacturer and seller of automobile tires who was sued for defamation after he published a statement that cast the plaintiff in a negative light within the public eye, ultimately causing them to suffer damage. This case helped lead to the eventual ruling of the Restatement that commercial entities are entitled to claim defamation as a form of protection from slanderous actions.
The ruling and subsequent reviewing of the law within this particular ruling of the Restatement of the Law 2d, Torts helped produce a template for future defamation trials involving commercial entities.
In terms of what constitutes a slanderous or defamatory statement made against a business entity, there are two primary areas that stand out from the rest:
A spoken statement or comment that causes the subject of it great harm and is untrue can lead to a charge of slander against the commenter. As with other forms of defamation, this comment has to be made to a third party, and if the comment reaches that third party and damages the entity from there, it will be considered slanderous, as long as the comment can be proven to be untrue.
The Legal Distinction: Slander and Libel Against Businesses
Now that we have examined slander versus libel on an individual or person-to-person basis, let’s look at how this applies to a business or organization. Slander and libel are slightly different from a legal standpoint for businesses and organizations. A business cannot sue for slander; only libel applies. So the harm must be published in a permanent way in a tangible form, such as a print ad, pamphlet, on the internet (risk of defamation for posting a negative review), or television, etc. So it really becomes a question of permanence and if the allegation of defamation is truly permanent in nature when it involves a business or organization.
While we often think of slander and libel when a person is defamed, the truth is that any party may be defamed whether it’s a business or individual. For example, ABC Bakery might be defamed in the community through a rumor that its baked goods contain rat poison. The nature of the speech doesn’t matter; the focus is on whether it was published, and in this case, it was published because people knew of the speech.
The difference between slander and libel in the context of the business or organization is this: If the speech was made in writing, it’s libel. If it’s only spoken, it’s slander.
One example I often tell my defamation clients is the case of an advertisement on national television in which a huge nationwide fertilizer company ran a commercial with a bomb going off in front of the competition’s building. While broadcast on the airwaves is not traditional "publication" by an individual, the speech is considered published if it is widely known and broadcasted to the general public.
In this commercial, the act of a bomb going off on national television in front of the competitor’s location is a definite statement of fact that the competitor sells a product that is dangerous. In this particular case, the company in question sold nothing even related to fertilizer. The bomb going off was an in-your-face statement so obvious that it went viral, literally. My dog even noticed it as she sat in front of the television. She jumped and looked at me in horror. This is an example of speech that was not only heard but everyone noticed. Everyone heard the commercial and it was instantly noted that the bomb was right in front of the competitors’ place of business. The advertisement on the airwaves in front of millions of people created a spiral of absolute media attention that no one would ever miss in a case like this.
Now the question comes down to personal liability. Most companies have managers or vice-presidents who are responsible for the content that occurs within a company. Let’s say there’s a vice-president purposely trying to hurt a competitor with allegations of bribery and kickbacks to his own suppliers (as an example). The company could hold him personally liable as well as the company itself. Possible defendants are the communication director, the vice-president of marketing, and the chief executive officer. Those executives would be defending themselves from possibly having to pay the damages in the lawsuit.
The Burden of Proof in Slander Cases: What Companies Need to Show
While slander cases involving companies are significantly rarer than those involving individual plaintiffs, they do exist. When such a case arises in court, the principles of defamation for private companies generally overlap with those surrounding the defamation of private citizens.
In principle, most courts argue that some sufficient damage must be done to a company’s reputation before a case can be taken into account. Damage to reputation is one of the keys to defamation, and if such damage cannot be substantiated through evidence, then a case may be thrown out before proceeding.
In any defamation case, the burden of proof hinges on whether the plaintiff is a private citizen, a public citizen or a government citizen. As a general rule, if the target is a private citizen, then the plaintiff must demonstrate sufficient damage caused by the statement. These damages are often referred to as "special damages." Thus, a company that seeks to take legal action against someone for slanderous statements must prove it experienced specific and quantifiable damage in the form of lost revenue, business opportunities, etc.
When a plaintiff is targeted through slanderous words, they must show their claims are valid. Specific laws on this vary from state to state, but in many jurisdictions, the plaintiff does not need to demonstrate special damages if the alleged slander is "defamation per se," which is, as a practical matter, an exception to the general rule regarding damages.
Other exceptions may include situations in which a person appeals to any one of the following avenues when seeking to recover for economic damages in slander cases:
Specific circumstances vary from one state to another, so the best first step for individuals (or corporations) who believe they have suffered slanderous damage is to consult a qualified and experienced attorney. A lawyer will be able to provide insights into the legal process, how the law applies in their case, and how best to proceed.
Risks and Consequences of Slandering a Company
The consequences of slandering a company can be distinctively different than those associated with slandering an individual. If an individual is found liable for slander, they would be responsible for the damages that the defamation caused. However, if the damages to a company were caused by slander, it could result in more severe liability than simple compensatory damages. This is because, just as with any other type of civil liability, slander is subject to punitive damages (also called exemplary damages). Punitive damages are imposed for egregious cases of criminal behavior, and the entire point of punitive damages is to punish the defendant for their behavior as well as to make an example so that others will not repeat the behavior. Another issue when slandering a company is that it could result in corporate penalties. When companies violate the law or cause damage that is subject to penalties, it can mean a fine . The amount of the fine depends largely on the law that was violated, the severity of the violation, and again, the intent of the author. There may be some very strict laws to protect consumers, or to protect businesses from unfair competition. Violating these laws can make an individual subject to all sorts of penalties. Further, some cases may be subject to tort laws. Slander laws involve tort, which is when an individual commits a civil wrong that could involve financial restitution. Tort laws are subject to harsh penalties, and if the case involves negligence or malice, it can result in millions of dollars in restitution. There may also be criminal liability for slandering a company. In the United States, slander is a common law crime, and it may be a statutory crime as well in some states. If the slander is serious enough, it can be charged in criminal court, and result in fines and imprisonment.
Defenses Companies Can Assert Against Slander
The Truth – The simplest and most common defense to slander actions brought by any plaintiff, including companies or businesses, is the truth. If the statement or statements that you made were true, then that is typically a complete defense to the allegation of slander. Keep in mind that the truth, as a defense to a defamation case, must be a complete truth. If any part of the statement or statements that you made are not accurate, that part will be jurisdictionally actionable as slander.
Opinion – A statement is protected if it is merely an opinion. If the statement or statements you made were only your opinions, then, just like with the truth, this is typically going to be a complete defense against a defamation claim. The reason for this is that opinions can’t be verified and therefore are not defamatory in the first place.
Privileged Statement – Another defense that you may have is that the statements you made were privileged. These include various types of communications that occur in a number of contexts, including some governmental processes. For example, if you made your statement during a government proceeding and that proceeding itself was relevant to the underlying context of the statement, this may be a protected privilege.
How Companies Can Guard Against Slander
If the possibility of a legal action for defamation exists, the first step is to address the claims directly and openly with the person spreading the slanderous statements. In some cases, a company can persuade an employee to voluntarily sign a written agreement or studio/release agreement requiring them not to disclose certain proprietary information. In a perfect world, all employees would sign such agreements, but the reality is that most businesses only require their executives/managers to do so. If the information being disclosed constitutes trade secrets, it is possible that a court may issue an injunction barring the disclosure of the information, if its value to the company can be shown to be worth the pain and trouble of defending a lawsuit and the likelihood of success on the merits is high . Treaties between the U.S. and other countries give the country where the violation occurred the ability to "stop" goods suspected of being a violation of the trade secrets or some other intellectual property right when they are imported into the U.S., whether it is from Canada to the U.S., or from China to the U.S.
Other actions that companies can take include the sending of a cease and desist letter seeking only injunctive relief or oral or written apology (sometimes needed when an employee, client or vendor slanders a business) or even filing a defamation complaint against the parent company of the offending person who is slandering or defaming the company, if the offender is out of reach.