Early Mitigation Of Defamation Damages

While it may not be true that the pen is mightier than the sword, in the defamation world, it is unquestionably the case that the pen (or more appropriately in this digital age, the keystroke) can lead to the award of significant monetary damages. In recent years, defamation claims have resulted in multi-million-dollar verdicts. The cases are not limited to media defendants. Non-media businesses face serious risk. For instance, in 2008, in what was at the time the largest jury verdict in a defamation matter in U.S. history, a Mexican contractor obtained a $188 million verdict against a businessman who was found to have made libelous statements in a U.S./Mexican publication. See Rebello, Justin, "Where Are They Now? A Look Back at the Top Verdicts of 2008," Lawyers Weekly USA (2010) (referring to Cantu v. Flanigan, Case No. 05-3580 (E.D.N.Y.), which was appealed and affirmed in part and remanded in part, but the full verdict was eventually affirmed at 705 F. Supp. 2d 220 (E.D.N.Y. 2010)).

Defamation damages are notoriously difficult to quantify, which increases the risk and uncertainty in defending defamation claims. "Risk" and "uncertainty" are two words no business wants to hear from its general counsel's office. Adding to the pressure is the fact that there are some very important tactical decisions that the potential defendant needs to make before the plaintiff files the complaint. Do you retract the allegedly offending statement? Do you stay silent? Do you respond with a clarification? Do you remind the plaintiff of the duty to mitigate damages? There is no easy answer to any of these questions, but all require the same thing: an early comprehensive assessment of the strengths and weaknesses of the pending defamation claim, including the potential exposure.

Defamation and Non-Media Defendants

Under the Restatement, a plaintiff asserting a claim for defamation must establish "(a) a false and defamatory statement concerning another; (b) an unprivileged publication to a third party; (c) fault amounting at least to negligence on the part of the publisher; and (d) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication." See Restatement (Second) of Torts § 558. A public-figure plaintiff has the additional burden of proving actual malice—that is, that the defendant published the statement with knowledge of its falsity or with reckless disregard as to its truth. The Restatement states that the same standard of fault—whether it be negligence or actual malice (depending on the plaintiff)—should apply to media and non-media defendants alike. See id. at § 580A, cmt. h, 580B, cmt. The degree to which the Restatement standards have been applied varies to some degree from state to state.

Typically, there are three main categories of available damages: (1) general damages for harm to reputation; (2) special damages; and (3) punitive damages (only a handful of states do not allow punitive damages). Generally, the plaintiff must show actual damage to receive general and special damages, and must show willful and malicious injury to the plaintiff's reputation to obtain punitive damages. See id. at § 620–23; see also 1-6 Business Torts 6.02, Commercial Defamation (2012).

There are no defined rules as to the damages the jury may award. One reason for this ill-defined contour is the fact that it is difficult to quantify damage to one's reputation. The...