A good reputation is crucial to the success of your business and it must be protected. Disparaging statements made about your business by disgruntled ex-employees or other third parties can cause serious reputational damage. Such statements can erode consumer trust, lead to a loss of custom and significantly impact revenue. If the statements have been communicated to a third party and are false, the maker of the statements and anyone who publishes them may be liable for defamation.
Contents:
- What is defamation?
- What is the difference between slander and libel?
- Can a business make a defamation claim?
- What constitutes ‘serious financial loss’?
- Examples of where we have helped business clients with a defamation claim
- How do I make a defamation claim?
- What can I expect to receive in damages?
- Is there a time limit for defamation claims?
- Summary
What is defamation?
‘Defamation’ refers to the act of communicating false statements about a person or business that damage their reputation. Defamation is a complex area of law, traditionally considered the preserve of celebrities and the press. The advent of the internet and, in particular, social media, however, has provided the general public with the perfect forum on which to publish defamatory statements should they so desire. Ex-employees, customers and competitors can post negative comments online about your business, to a potentially limitless audience.
Customers are entitled to speak honestly about their experience of your business. It is a defence to a defamation claim that the relevant statement is true or reflects an honest opinion. If, however, the statement is false and causes serious harm to your business’s reputation, you may have a claim for defamation.
Here, our business dispute solicitors examine the law relating to business defamation, what you need to prove to bring a claim and the level of damages you can expect.
What is the difference between slander and libel?
Libel and slander are both terms used to refer to defamatory statements. Libel is a defamatory statement made in a permanent form, such as in writing or through a broadcast. Slander is a transient defamatory statement of which there is no permanent record. A slanderous statement can be made through, for example, speech or gestures.
Whilst claims for both libel and slander require that there has been a false statement which has caused reputational damage, the legal tests which apply are slightly different. As a general rule, it is easier to prove a claim for libel than for slander.
Can a business make a defamation claim?
Yes, it is possible for a business to make a defamation claim if it satisfies the legal requirements. In the context of individuals, defamation law can provide redress for a false statement that has caused ‘serious harm’ to their reputation. The type of statements held by the Court to be defamatory to an individual include ones relating to blackmail and match-fixing for example. Reputational harm in a business context is different. A business is a corporate entity that cannot be offended by disparaging comments in the way an individual can. Accordingly, to bring a claim for corporate defamation, you need to show that the business has suffered, or is likely to suffer, ‘serious financial loss’ as a result of the defamation.
What constitutes ‘serious financial loss’?
Unfortunately, there is no definition of the types of loss that will satisfy the requirement for ‘serious financial loss’ in a defamation claim. As with many things in law, each case will hinge on its own facts; what may constitute ‘serious financial loss’ for one business, might not for another. The loss of one customer for a large business with numerous revenue streams might not satisfy the requirement. If, however, you run a small business that services a small number of high-value customers, losing just one of them may constitute ‘serious financial loss’.
You should seek advice from a business dispute solicitor as soon as you become aware that a defamatory statement has been published about your business. They will assess the likelihood of any financial loss you have suffered, or are likely to suffer, satisfying the somewhat vague legal test of being sufficiently ‘serious’.
Examples of where we have helped business clients with a defamation claim
Our solicitors regularly advise businesses of all sizes on all matters relating to defamation and reputation management. Since the harm caused by a defamatory statement can escalate the longer it remains unchallenged, our solicitors are adept at taking decisive, urgent action to affect the removal or retraction of the offending material and stem any further damage.
Examples of cases our solicitors have assisted with include –
Removal of a defamatory video from YouTube
Our client was the provider of specialist equipment and became the subject of a defamatory video posted on YouTube by a customer who had made a purchase from our client. The video contained several untrue statements about our client’s service and delivery. The customer also wrongly alleged in the video that numerous positive reviews about our client were false and had been posted by our client.
Our business dispute solicitors acted swiftly to prepare a communication to be sent by our client to the YouTuber and advised our client to simultaneously make a formal complaint to YouTube. When the YouTuber refused to take down the video, we sent a formal letter of claim, threatening injunction proceedings unless the video was taken down in 48 hours.
The YouTuber complied with our demands and removed the video.
Removal of defamatory reviews made by ex-employees on Glassdoor
Our client employed several members of nursing staff, one of whom was dismissed for inappropriate behaviour. Other staff members left shortly afterwards. Anonymous defamatory reviews about our client were subsequently posted on the popular review website, Glassdoor. The website refused to remove the posts which were causing considerable reputational harm to our client.
Our business dispute solicitors sent urgent letters to each of the ex-employees. The letters stated that we would take further steps to ascertain the authors of the reviews and pursue them for defamation if the reviews were not taken down immediately.
The ex-employees denied involvement, but the reviews were removed on receipt of our letters.
Retraction of defamatory statements made by a competitor
Our client, a supplier of raw materials, became aware that a competitor had made defamatory statements about our client to customers.
Our solicitors promptly sent a letter to the competitor detailing the defamatory statements and stating that further action would be taken if the matter was not imminently resolved to our client’s satisfaction. When they received our letter, the competitor disciplined and subsequently dismissed the staff member involved and formally apologised to our client.
How do I make a defamation claim?
The first thing you should do on becoming aware of the publication of a defamatory statement about your business is to seek legal advice. Timely legal assistance will help to prevent further dissemination of the defamatory material and minimise the harm caused.
It is important to collate and retain any evidence that your solicitor can subsequently use to support your claim. Such evidence may include –
- screenshots of the defamatory statement if made in writing or online;
- correspondence regarding the defamatory statement with the maker of it or third parties. It is advisable to make a contemporaneous note of any conversations or, better still, follow up with written communication;
- comments made by prospective customers that they decided not to use your business because of the defamatory statement. Again, it is preferable for such comments to be in writing. If they were made orally, try to follow up by email or another written form of communication.
When a defamatory statement is made about your business online, your primary concern is usually its urgent removal from the internet. Most social media platforms have policies dictating the terms on which their platforms can be used. If a post breaches those terms, you can request that it be taken down. Unfortunately, social media platforms are often slow to respond to complaints from individuals and may refuse to act at all if the legalities of the post are not straightforward, such as whether or not a post is defamatory. Accordingly, our solicitors will usually send a letter direct to the poster demanding the immediate removal of the defamatory material. The receipt of correspondence of this nature is sometimes enough to persuade the individual to act.
Where the statement has been made elsewhere, to customers by email or in person, for example, our solicitors may seek to stem the damage by insisting that the statement be retracted, and an apology made.
If the maker or publisher of the defamatory statement fails to comply with these demands, urgent action can be taken to obtain a Court Order forcing them to take down or retract the defamatory statement.
Our solicitors will work with you to ascertain the best way to address any losses resulting from the defamation and ensure you suffer no further reputational damage. In many cases, this will include demanding the payment of damages from the other side together with legally enforceable assurances that they will refrain from defaming your business in future.
Many defamation claims are settled without recourse to the Court, and our solicitors will always seek to achieve your desired result in the quickest, most cost-effective way. This may be through negotiation with the other side or alternative dispute resolution methods such as mediation. If a case proves incapable of resolution through these methods, our solicitors can pursue Court action seeking damages, costs and an injunction preventing any further publication of the defamatory statement.
What can I expect to receive in damages?
Save in exceptional circumstances, damages for defamation are compensatory rather than punitive. They are intended to compensate your business for any loss it has suffered, as opposed to punishing the maker of the statement.
The law awards different types of damages to compensate for different losses. ‘Special damages’ compensate for losses which stem directly from the defamatory statement and are readily quantifiable. These losses may include the income you missed out on from customers who had agreed to use your services but pulled out following publication of the defamatory statement, and any expenses you incurred to limit the reputational damage, such as employing a specialist PR company to address the negative publicity.
‘General damages’ are intended to compensate for injury to reputation. Since the law considers that a business will only have suffered serious reputational harm if it can show serious financial loss, it follows that general damages will be based on the economic damage resulting from the defamation.
The Court has wide discretion when deciding the level of damages to award in a defamation claim. It will take into account various factors including the severity of the defamatory statement, the extent of publication and the conduct of the maker of the statement.
Whilst the Court may award general damages based on inference, the more evidence you can provide of economic harm, the stronger your claim will be. Evidence which can be useful to support your claim includes –
- a general dilution of goodwill;
- a drop in revenue following the defamatory statement;
- a drop in share price following the defamatory statement;
- a loss of investors following the defamatory statement;
- difficulties in borrowing following the defamatory statement.
Is there a time limit for defamation claims?
A defamation claim must generally be brought within 12 months from the date of publication of the defamatory statement. Since the harm caused by a defamatory statement can escalate the longer it is left unchallenged, you should seek urgent legal assistance to affect the removal or retraction of the offending material as soon as you become aware of it.
Summary
Defamatory statements can have devastating consequences for your business, and it is crucial that you take urgent action to limit their impact. Our business dispute solicitors will act swiftly to affect the removal or retraction of the defamatory material and stem your losses. We will seek redress for any reputational damage caused and ensure that the defamatory statement is not published in future. Defamation law is a complex area of law encompassing statute and common (case law) and we may sometimes use it in conjunction with other areas of legal practice including harassment, breach of privacy and malicious falsehood to obtain the optimum outcome for you.
