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Legal Clinic

Companies That Sue for Defamation

Companies -- not just people -- are capable of being defamed, which means they can file defamation suits against ex-employees who make disparaging public statements against their former employer.

Monday, August 13, 2012
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Question: Recently a group of disgruntled former employees have been making disparaging public statements against the company and the supervisors who fired them. Some supervisors are planning to personally sue these ex-employees for defamation. Does the law allow the company to also sue for defamation? If so, what would the company need to prove in order to succeed in a defamation lawsuit against these former employees? We are in New York and New Jersey.

Answer: Companies may sue former employees for defamation under the laws of either New York or New Jersey. A corporation, or other business entity, is capable of being defamed and may bring a cause of action for defamation. See, e.g., 600 West 115th St. Corp. v. Von Gutfeld, 169 A.D.2d 56, 572 N.Y.S.2d 655 (1st Dep't 1991), order rev'd on other grounds, 80 N.Y.2d 130, 589 N.Y.S.2d 825 (1992) (the corporate owner of a business, such as a restaurant, has standing to commence an action for defamation relating to the business). 

Under New York law, the company would need to prove: (1) the former employees made false statements about the company; (2) the former employees communicated the false statements to a third party without privilege or authorization; (3) with fault amounting to at least negligence; and, (4) the false statements caused special harm/special damage or defamation per se. See Dillon v. City of N.Y., 261 A.D.2d 34, 38, 704 N.Y.S.2d 1, 5 (1st Dep't 1999) (citing Restatement of Torts (Second) § 558).

 

Under New Jersey law, the company would need to prove: (1) the former employees made false statements about the company; (2) the former employees communicated the false statements to a third party; (3) with fault amounting to at least negligence; and, (4) the company suffered damages. See DeAngelis v. Hill, 180 N.J. 1, 12-13 (2004). 

Both New York and New Jersey require the company to show fault on the part of the disgruntled former employees "amounting to at least negligence." "Amounting to at least negligence" is generally determined by whether the speaker of the false statement failed to ascertain the truth or falsity of the statement prior to communicating the statement. See Senna v. Florimont, 196 N.J. 469, 474 (2008); Dillon, 261 A.D.2d at 38, 704 N.Y.S.2d at 5. 

As to proof of damages or special harm, the company will have to prove the defamatory statements of the former employees caused actual harm to the reputation of the company, through proof sufficient to demonstrate specific quantifiable monetary or economic harm to the company's reputation. See McLaughlin v. Rosanio, Bailets & Talamo, Inc., 751 A.2d 1066, 1071-72 (N.J. Super. Ct. App. Div. 2000); Liberman v. Gelstein, 80 N.Y.2d 429, 434-35, 590 N.Y.S.2d 857, 860-61 (1992).

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The company's suit for defamation would have to be brought within one year of the last oral defamatory statement, as both New York and New Jersey have one-year statutes of limitation for defamation. N.Y. C.P.L.R. 215(3) (McKinney 2012); N.J. Stat. Ann. § 2A:14-3 (West 2012). Oral repetition of a defamatory statement gives rise to a new cause of action and the single publication rule does not apply to spoken defamatory statements. Cipriani Builders, Inc. v. Madden, 912 A.2d 152, 164 (N.J. Super. Ct. App. Div. 2006) (citing Restatement (Second) of Torts § 577A(1)-(3)); Lancaster v. Town of East Hampton, 54 A.D.3d 906, 907, 864 N.Y.S.2d 537, 538-39 (N.Y. App. Div. 2008).

Keisha-Ann G. Gray is senior counsel in the Labor & Employment Law Department of Proskauer in New York and co-chair of the Department's Employment Litigation and Arbitration Practice Group.

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