What Should You Do If You Think You Have Been Defamed?

A. Singer & Associates

Clients bring up the idea of being slandered fairly often. It is not just insulting to have someone make up lies about you, but even more upsetting when it affects your business. I have heard more and more stories of this happening. Just recently a woman called me about an employee she just fired who is badmouthing her company to her own customers. Another client was falsely accused of criminal fraud (which is still pending) and when it ends in his favor – as it should – he has already told me he wants to sue for slander!

I even had a client who was providing broadcasting equipment in Nigeria – of all places. They were shipping people and equipment to Abuja, setting up a new radio station for a Christian network down there. It seems that a competitor – a huge company in New York BTW – was quite dismayed that all that business was going to my client. To curtail all the business going to its competitor, the company notified the Christian network that my client was going broke and wouldn’t be able to finish the project. It was an out-and-out LIE!

The Nigerian network had been wiring payment to my client in California and all his payments came to a complete stop once they heard that my client was on the verge of going broke. We sued of course, but let me tell you the harrowing details.

First of all, a defamation case is nearly impossible. The landmark case in California involves a restaurant in Santa Monica where a fired and apparently angry ex-employee stood in front of her ex-employer’s restaurant on its busiest nights handing out flyers on how people should never eat there. She claimed that the restaurant was filthy and that employees were spitting in the food. Even though these statements were all lies, we have something in the United States called freedom of speech which ultimately protected even her slanderous remarks. The court ultimately decided that the woman had a right to voice her opinions and the restaurant lost the suit!

Seems outrageous, right? In my Nigerian case (we filed suit in California State Court), the large and quite wealthy company that had slandered my client hired one of the biggest law firms in the county. They had multiple attorneys working day and night on the case, running up hefty legal fees that affected my client, of course. The first thing they did was move the case to Federal court – perhaps thinking they would have more leverage there – particularly with a slander case that would come up against the First Amendment right of Free of Speech!

The short story is that it is not a good idea to try to challenge freedom of speech even though you may have suffered damage because of someone else’s slander. I was confident that we would win our case but in the end, the judge didn’t agree. Had slander been our only cause of action, we would have been up a creek as the expression goes. On the day of the hearing on our motion for summary judgment, the judge who looked like a character from James Clavel’s Shogun, didn’t agree that we had a viable case for slander. The judge who was Japanese sat at his bench in his long black robes. The bench was elevated higher than any of the rest of us and made him look quite menacing. I obtained his tentative ruling in writing before the hearing commenced. It was clear that the case was going to be dismissed unless I came up with something quickly. I argued my position but what held the case in place was a completely different cause of action for interference with contract. Though the judge had already ruled that a competitor can say what it likes about another company, the judge did not agree that such interference should be allowed if there was already a contract in place between the other parties. We never had to go before the judge again as the opposing side agreed to meet to mediate this remaining claim and we ultimately prevailed getting a nice settlement. To this day, neither side knows how the judge would have ruled on the interference with contract claim that he continued to another day. Since he stopped in his tracks and agreed to continue the hearing so that we could further brief, the issue, my guess is we would have prevailed. The other side apparently was worried about the final outcome and agreed to settle.

The settlement was a pittance, however, compared to the amount of business my client lost as a result of the opposing side’s slander. My client was unable to convince the Christian network to continue to do business with them. There’s no doubt that this was a major account and source of income that was forever lost because of a competitor’s lies. But, freedom of speech is such an important and vital right, I guess it is good that courts continue to protect it even if it may not seem fair in the end.

Moral of the story is don’t let your business rely on only one customer no matter how good they may look. But, then that’s a story for another day.

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