Defending your business reputation that is under attack

Businesses have access to many forms of legal restitution when false statements are made that damage their reputation, says Defamation Attorney Christian R. Patno, a Principal at McCarthy, Lebit, Crystal & Liffman.

“As defamation claims become more commonplace online and otherwise, businesses need to proactively take steps to ensure they are prepared to respond,” Patno says. At the same time, businesses also need to make sure they are protected if they are accused of defamation.

“Defamation coverage is available, but not all insurance companies offer it. It is very important that companies review their policies to make sure they have enough coverage for their employees and officers,” he says.

Smart Business spoke with Patno about defamation and how businesses should respond when they believe it has occurred.

What can a business do when false statements are made in the media that damage its reputation?
Defamation is defined as any false statement that hurts someone’s good reputation. Libel is a written falsehood while slander is spoken. If someone is stating an opinion rather than a fact, defamation does not apply.

When a false statement is broadcast on TV or published in a newspaper in Ohio by the media employee, there are statutory rights to demand that a correction be broadcast or published within a short time period. Media outlets that do not provide that corrective action risk statutory penalties.

What are business responses to defamation claims in the non-media arena?
When a potential claim arises, there are two perspectives that should be considered. One is the legal aspect of the case and the other is how the pursuit of the case will affect the business non-legally.

At the claim stage, the defamed business has the ability to negotiate an appropriate settlement to avoid litigation. This might involve a retraction and corrected statement, a cease and desist, as well as financial compensation from an insurance company or the personal assets of the accused if damage has occurred.

If unsuccessful, the claim then moves to litigation, subpoenas get issued, records are opened and the privacy of the business victim and defendant is broken as the process runs its course. This unfortunately may result in information coming out through litigation that the defamed company would prefer to keep confidential.

The ultimate question at each stage that must be asked is whether the gain from litigation is greater than the toll it takes to obtain it. The statute of limitations in Ohio for libel and slander is one year from the date it occurred.

However, if a false statement was published three years ago and is republished, the clock starts again and the entity that republished it would be liable for a defamation claim. In Ohio, compensatory damages for defamation have been capped between $250,000 and $350,000, depending on factors. Past economic damage leading up to trial and post-trial are also considered.

What are some risks that businesses must confront in relation to defamation?
Defamation claims in the business sector often involve a competitor or former employee, and something that is posted online, tweeted or told to the media or the next prospective employer. There could also be a claim where a potential customer is told something about a competitor that exposes that company.

There are also situations where business owners can make statements. The question in these business owner situations becomes whether the defamation was made in a personal capacity, as a business owner or both. It is important to avoid making any statements that could be construed as being untruthful about employees or competitors.

Organizations should train personnel to couch statements in the form of opinion and specifically use the words, ‘In my opinion.’ When talking about former employees, the best advice is to avoid negative statements. If the statement is made in good faith and is not malicious, it is probably safe. Remember, truth is an absolute defense.

Immunities also apply, depending on where the statement is made, who the defamed victim is and the content of the statement. If the statement is made with malice or reckless disregard for the truth, it could create the risk of punitive damages and attorney’s fees.

Insights Legal Affairs is brought to you by McCarthy, Lebit, Crystal & Liffman.