Injurious Falsehood

Injurious falsehood is essentially interfering with the sale of the plaintiff’s property by virtue of the disparagement of either the plaintiff or his property.

In order to prove a prima facie case of injurious falsehood, the plaintiff must prove that:

1. The defendant intentionally made false statements disparaging the plaintiff’s property or business interests
2. The statements were published to third persons
3. The defendant’s statements were the cause of the harm suffered by the plaintiff
4. The plaintiff suffered "special damages". Special damages are a legal term for actual economic damages

First and foremost, the plaintiff must demonstrate that the defendant’s statements were false. If the defendant’s statements are true, the plaintiff cannot recover. For example:

Sunshine is a grower and wholesaler of oranges. The Squeeze Me Orange Juice company wants to buy its oranges from Sunshine but TropInc tells Squeeze Me that Sunshine’s oranges are sour and not fit for juice. If what TropInc says is, in fact, true, Sunshine will not have a cause of action against them.

The plaintiff must also show that the defendant published his statements to a third person. Further, the plaintiff must prove that the defendant’s statements were disparaging to the plaintiff’s property or financial interests. A statement that disparages the plaintiff’s property or business interests is one that will reasonably discourage others from doing business with the plaintiff.

There are two basic subcategories of injurious falsehood that the defendant can be liable for: slander of title and trade libel. Slander of title is where the defendant falsely claims that the plaintiff does not own the property he is dealing in. See New England Oil & Pipe Co. v. Rogers, 7 P.2d 638 (Okla. 1932). For example:

Sunshine is a grower and wholesaler of oranges. The Squeeze Me Orange Juice company wants to buy its oranges from Sunshine but TropInc tells Squeeze Me that Sunshine does not actually own the oranges they are trying to sell. As a result, Squeeze Me finds another supplier. If Sunshine is the rightful owner of the oranges, they will have a cause of action against TropInc for slander of title.

Trade libel is where defendant makes false statements as to the quality of plaintiff’s goods so that customers will be discouraged from buying them. Dale System v. Time, Inc., 116 F. Supp. 527 (D. Conn. 1953). For example:

Sunshine is a grower and wholesaler of oranges. The Squeeze Me Orange Juice company wants to buy its oranges from Sunshine but TropInc tells Squeeze Me that Sunshine’s oranges are sour and not fit for juice. As a result, Squeeze Me finds another supplier. If Sunshine’s oranges are fit for juice, they will have a cause of action against TropInc for trade libel.

Please note that the defendant’s statements do not have to be defamatory in order for them to be actionable for injurious falsehood.

As we said before, truth is a complete defense to a charge of injurious falsehood. Consent is also a viable defense. Further, both the absolute and conditional privileges that act as defenses in defamation cases will be viable defenses in injurious falsehood cases as well.

However, one particular conditional privilege that exists only in the area of injurious falsehood is the privilege that business competitors have in advertising their products. Where the plaintiff and the defendant are business competitors, the defendant is allowed to "puff", his products i.e., make general statements about his own products, even if those statements are false. However, the defendant is not allowed to make disparaging statements about the plaintiff’s products. For example:

1. The Squeeze Me Juice Company is a business competitor of the Orange U Smart Juice Company. In a commercial advertisement, Squeeze Me claims that their juice has a higher nutritional value per glass than Orange U’s juice. In this situation, Orange U will not have a viable cause of action, even if Squeeze Me’s statements are false, because this kind of “puffing” is privileged.
2. The Squeeze Me Juice Company is a business competitor of the Orange U Smart Juice Company. In a commercial advertisement, Squeeze Me claims that Orange U’s juice has a lower nutritional value per glass that Squeeze Me’s juice. In this situation, Orange U will have a viable cause of action against Squeeze Me because, while Squeeze Me is privileged to “puff” his own products, he is not privileged to make disparaging statements about his competitor’s products.

If the plaintiff and defendant are not business competitors, the defendant will only be protected from liability so long as he honestly believes the truth of his statements and he qualifies for protection under one of the privileges granted by the laws of defamation.