BUSINESS LITIGATION CASES

BUSINESS TORT CASES

Recent Defamation Case

It is more and more common for traditional business cases to take on other civil wrong – tort features.
In a recent case, VLG successfully defended against charges of defamation against a shareholder in a small business corporation who was quite vociferous in slamming management. Specifically, it was alleged that before a shareholders’ meeting, at the meeting, and just after in correspondence that the shareholder had defamed the President of the company. The shareholder defended in part, that as a shareholder, he had a right to express his opinion as to the operations of the corporation.

At common law, the elements of defamation appear fairly simple. In Rouch v. Enquirer & News of Battle Creek, 440 Mich. 238, 251 (1992), the Supreme Court set forth the oft-cited four elements:

   “1) a false and defamatory statement concerning the plaintiff, 2) an unprivileged communication to a third party, 3) fault amounting to at least negligence on the part of the publisher, and 4) either actionability of the statement irrespective of special harm or the existence of special harm caused by publication.”

Since a defamation lawsuit necessarily implicates First Amendment guarantees, a plaintiff must also overcome a number of constitutional barriers to prevail in such an action. These constitutional concerns make the elements concerning defamation considerably more complex and difficult to prove than other civil actions. While a defamation plaintiff has a difficult burden, such cases must be defended vigorously because they also threaten the possibility for a large verdict against the defendant.

In this particular case defendant asserted that because he was a shareholder and his speech was specifically directed only to corporation matters and other shareholders that he was entitled to a “qualified privilege” to say things, which outside of the privilege, might be defamatory.As explained in Swenson-Davis v. Martel, 135 Mich App 632, 635, lv. den. 419 Mich. 946 (1984):

    In general, a qualified privilege extends to all communications made bona fide upon any subject matter in which the party communicating has an interest, or in reference to which he has a duty, to a person having a corresponding interest or duty, and embraces cases where the duty is not a legal one but is of a moral or social character of imperfect obligation. Timmis v. Bennett, 352 Mich 355, 366; 89 NW2d 748 (1958). The initial determination of whether a privilege exists is one of law for the court. Lawrence v. Fox, 357 Mich 134, 139-140; 97 NW2d 719 (1959).

A plaintiff may only overcome a qualified privilege by a showing of malice. Malice in the defamation context does not mean ill-will. Rather, it means a heightened level of fault. Citing Grebner v. Runyon, 132 Mich. App. 327, 332-333 (1984), the Ireland Court explained:

“Actual malice is defined as knowledge that the published statement was false or as reckless disregard as to whether the statement was false or not. Reckless disregard for the truth is not established merely by showing that the statements were made with preconceived objectives or insufficient investigation. Furthermore, ill will, spite or even hatred, standing alone, do not amount to actual malice. “Reckless disregard” is not measured by whether a reasonably prudent man would have published or would have investigated before publishing, but by whether the publisher in fact entertained serious doubts concerning the truth of the statements published.” Ireland, supra. at 622.

In the subject case VLG was also successfully able to assert an additional defense that the spoken and written words were not capable of defamatory meaning and were also true. In other words, even if words are capable of being understood as defamatory, if truthful, then they are not actionable. Only false statements are actionable and truth is always a perfect defense. The trial judge granted defendant’s motion to dismiss the lawsuit summarily.

[Guy Vining, an attorney, in metro-Detroit, maintains his office in Taylor, Michigan, where he serves the local communities and the tri-county area. If you or a family member of friend would like a no-obligation no cost consultation, just call or E-mail Guy Vining of Vining Law Group, P.L.C to schedule a meeting.]