Business Disparagement in Texas

Texas Statutes for Business Disparagement

Texas law offers recourse if someone knowingly and falsely spreads information which causes harm. The focus of that false information, however, determines whether the false information is classified as defamation or business disparagement. While each can be damaging to a reputation, business disparagement differs from defamation in a critical way. Defamation occurs if an individual’s reputation is the focus of the false information. If the false information is about a business and damages its economic interests, it is labeled as business disparagement and treated separately from defamation. Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex 2003). It is possible to make a claim for both defamation and business disparagement if both the individual and business are harmed by false information. In re Lipsky, 460 S.W.3d 579, 591 (Tex. 2015).

Elements of Business Disparagement

In order to prove business disparagement, the plaintiff must successfully show that the defendant published false and disparaging words about a business, that the defendant acted with malice and without privilege, and that those actions resulted in damages to the plaintiff. 

To be found liable of business disparagement, a defendant must have knownof the falsity or acted with reckless disregard concerning it, or [that] he acted with ill will or intended to interfere in the economic interest of the plaintiff in an unprivileged fashion." Forbes at 170 (citing Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 766 (Tex. 1987).

Definition of Terms

A defendant’s words are disparaging if they “cast doubt” on the quality of the business, and the defendant knew that those words would cast doubt. The words are false if the plaintiff proves that the words are untrue and inaccurate. The plaintiff and not the defendant has the burden of proof in a question of business disparagement.

The plaintiff must also prove that the defendant acted with malice, intentionally harming the plaintiff’s business, that the defendant had strong suspicions about the truth of the published information yet acted “with reckless disregard…ill will or intended to interfere in the economic interest of the plaintiff,” Bentley v. Bunton, 94 S.W.3d 561, 591 (Tex.2002).

In addition, the plaintiff must prove that the defendant does not have privilege, meaning that he or she has some form of legal immunity which offers protection from the consequences of making disparaging comments. Hurlbut v. Gulf Atl. Life Ins. Co., 749 S.W.2d 762, 768 (Tex. 1987).

Finally, the plaintiff must offer proof that he or she suffered special damages, which were a direct result of defendant’s words. Because the attack is on a business, the plaintiff must prove a “loss of trade or other dealings” in order to recover damages. Hancock v. Variyam, 400 S.W.3d 59, 65 (Tex. 2013).

Even if the plaintiff successfully proves the other elements, if no proof of special damages exists, the plaintiff will recover nothing from the defendant. The limitation for business disparagement is two years. If the plaintiff does not prove that the business was adversely affected but proves the other elements, the cause of action may then be defamation. However, that cause of action has a statute of limitations of only one year.

False information about a person and/or business may have severe long-term repercussions, and legal recourse may be the best option. Working with an attorney experienced with business litigation ensures that a client is able to successfully prove or defend against business disparagement, helping the business recover in the process.

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