The Supreme Court Makes It Clear When A Business May Use A Defamation vs. Business Disparagement Claim To Protect Itself
Emma M. Gorksi
On June 26, 2020, the Supreme Court of Texas distinguished the torts of defamation and business disparagement as mechanisms to protect businesses in Texas from false statements or accusations. Innovative Block of South Texas Ltd. v. Valley Builders Supply, Inc. d/b/a Valley Block & Brick, consistent with its opinion in previous cases, the Court held that statements implicating the quality of a business’s goods or services support a claim for business disparagement, while statements harming a business’s reputation or character support a claim for defamation. The Court explained that defamation protects the value of a business’s reputation, whereas business disparagement protects the value of a business’s commercial relations. In making this distinction, the Court noted that only a claim for business disparagement will stand when the injury relates solely to the plaintiff’s economic interests and disparage only the quality of the plaintiff’s goods or services but does not implicate the integrity of the business. The Court acknowledged that while it is possible for the two torts to overlap, statements disparaging a business’s products do not support a claim for defamation unless they also impugn the business’s character or reputation. Typically, disparaging comments about the quality of a business’s product do not necessarily impugn the business’s character or reputation. For a statement to qualify under both torts, the statement implicating the commercial interest must also fairly imply that the business is incompetent, dishonest, or perpetrating a fraud upon the public by selling something it knows is defective. Absent statements derogating a business’s integrity, a claim for defamation will fail.
For lawyers, like us, whose practice involves protecting businesses, their reputations, and their commercial relationships, this case is important to understand the claims necessary to safeguard and defend those business’ interests. This is especially true in this time where reputations and relationships are already under pressure because of limited face-to-face interaction. Businesses must take steps to preserve those interests using whatever legal means are available. For more information, please contact Emma Gorski or Brian Antweil.
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