Defamation versus business/commercial disparagement: A critical distinction

               A plaintiff in Texas lost almost $2million in an appeal before the Texas Supreme Court last year. Why? The initially victorious plaintiff insisted on submitting a defamation claim rather than its business disparagement claim to the jury. The case is Innovative Block of South Texas, LTD. V. Valley Builders Supply, INC., 603 S.W. 3d 409 (Tex. Sup. Ct. 2020).

                At trial, the plaintiff presented evidence of four statements defendant’s agents made disparaging the quality of Valley’s product. Moreover, the plaintiff presented evidence of specific business lost resulting from at least one of these disparaging remarks. Regardless, plaintiff insisted on submitting a damage to reputation claim to the jury.

                A few quotes from the Supreme Court sums up the problem as it saw it:

The common law recognizes the value of a business’s reputation and the value of its commercial relations. It protects the former through actions for defamation and the latter through actions for business disparagement… The plaintiff’s pleading asserted claims for defamation, slander per se, and business disparagement, but the plaintiff elected to submit only the defamation claims to the jury… Because the harm in this case relates solely to the plaintiff’s commercial interests and the falsehoods disparage only the quality of the plaintiff’s products and not the character of its business, we conclude this is not a case of defamation but rather of business disparagement- a cause of action not submitted to the jury… We accordingly reverse the judgment of the court of appeals affirming the award of compensatory damages and render judgment for the defendant.

Id. at 413. Ouch. What a painful lesson for trial counsel and its client.

                Cosgrove Law Group handles both defamation and commercial disparagement matters. Commercial disparagement has become rampant and its impact is devastating in this day of the internet. Falsehoods that go to either reputation or business services remain published forever for and to the whole world. It may not be fair, but there also may be a legal remedy. Food for thought.


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