Post Date: 2/29/2012
BY: J. ROBERT ECKLEY
Real Estate and Construction Attorney
February 1, 2012
©2012 ECKLEY & ASSOCIATES, P.C.
REPRINTED FROM "COUNSELOR'S CORNER", Ed. 58
Current Circulation: 75,004 per Month
“…HE SAID THAT SHE SAID THAT THEY SAID…”
You have just learned that one of your competitors is publicly calling you all kinds of nasty names and is specifically suggesting to all who will listen that you are “widely-known as incompetent” in your profession. One of your clients tells you about that and you tell them the competitor is “a liar and a crook.” Last week your best friend told you that a banker acquaintance of yours was being indicted for embezzlement. You hope it is untrue because you feel she is a great person but in caution you pass that along to your staff in a sales meeting. You just heard that an insurance broker you and others use regularly might be going broke. You have nothing against the man, but you mention that to some mutual acquaintances to see if they have heard the same thing and if there is any truth to it and you steer some clients away until the business risk is determined. You have heard that Jones & Sons Homebuilding builds defective homes and you advise a client who was considering buying from them to avoiding buying form them. A former employee of yours did a funny skit once at a company retreat which poked fun at new employees in the business. He is no longer with the business. That skit was videotaped and one of your employees periodically sends it to others. Your website has photos of people on it who are no longer with your firm, some of them merely in the background of photos of yourself or some in group company photos.
…….AND NOW “HERE COMES THE JUDGE”
There is a common element in all of these instances and “unpleasantness” is not it, though it surely is a by-product. No, the common element is BUSINESS and PERSONAL DEFAMATION and you are knee-deep in it! Yes, in high-end professional work where there is a lot of ego and in business environments where the going is competitive, tough and there is a lot of money at stake it has almost become the norm. The problem is merely that all of this negativity could also cost you your savings and your livelihood in a civil suit which includes punitive damages and/or a licensure complaint. No, it does not matter whether the “other guy started it”; it does not matter whether you knew the remarks were false or that you were impermissibly using something the law considers protected—it is only material that you passed along not knowing (or perhaps even caring) one way or the other; in some cases, even true statements that cause harm can be actionable by the target of them; it does not even matter that the target know he or she has been defamed or that the defamation was only passed in an entirely private letter or conversation or committed by publication of a mere photo.
Whatever the excuse, the long and short of it is that it’s probably only a matter of time before the Certified Mail Letter or the Process Server arrives at your door.
BUT WHERE DID I GO WRONG?
The fact is that in the eyes of the law you did something negative or unfair to another or the property of another. Not in a physical way. In a way affecting them emotionally or financially or exposing them to publicity they did not want, or to disrepute or embarrassment. It’s defamatory. It’s time that we examine what constitutes DEFAMATION. There are a number of types, some of which are far more discrete and less obvious than out-and-out calling someone a scoundrel on prime-time TV. As a businessperson, it’s worth a general review of the more common claims and ramifications, below because many of them seem so common or trivial they can be missed.
Generally speaking, defamatory statements are those that (a) are false and (b) bring the defamed person into disrepute, contempt, or ridicule, or impeach the person's honesty, integrity, virtue, or reputation. Turner v. Devlin 848 P.2d 286 (1993). See also RESTATEMENT (SECOND) OF TORTS '' 559. 561. Section 573 of the Restatement clarifies that "[o]ne who publishes a slander that ascribes to another conduct, characteristics or a condition that would adversely affect his fitness for the proper conduct of his lawful business, trade or profession, or of his public or private office, whether honorary or for profit, is subject to liability without proof of special harm." Therefore, any statements made by a defendant that affect another's fitness for conduct of its business are slanderous per se. The plaintiff may pursue the defendant for damages for slander without proving special damages. The plaintiff can claim for special damages, punitive damages and an injunction against you.
It is also noted that each communication of a defamatory statement, even though perhaps identical in content, constitutes a separate publication and a separate cause of action. Therefore, a separate cause of action exists on behalf for each person who has heard the defamatory remarks. State v. Superior Court, 921 P.2d 697 (Az. App. 1999) (citing RESTATEMENT (SECOND) OF TORTS, ' 577A). If the defendant is making continuous slanderous remarks, the number of cause of action against the defendant grows.
Section 629 of the Restatement of Torts defines disparagement as "[a] statement is disparaging if it is understood to cast doubt upon the quality of another's land, chattels or intangible things, or upon the existence or extent of his property in them, and (a) the publisher intends the statement to cast the doubt, or (b) the recipient's understanding of it as casting the doubt was reasonable."
Interference with Business Relations/Contract
Some defamations encourage others to stop or interrupt their business relations with another and that is actionable, as well. To establish a case of intentional interference with contract, the plaintiff must prove (a) the existence of a valid contractual relationship or business expectancy, (b) the interferer's knowledge of that relationship or expectancy, (c) intentional interference inducing or causing breach or termination of the relationship or expectancy, and (d) resultant damage. Wallace v. Casa Grande Union High School Dist. No. 89, 184 Ariz. 419, 908 P.2d 486 (Az. App. 1995).
Further, the existence of a contract is not an essential element of a claim for tortious interference with business relations. Bruce Church, Inc. v. United Farm Workers of Am., AFL-CIO, 169 Ariz. 22. 816 P.2d 919 (App. 1991). Therefore, even if there is no contract at issue, as may be the case with the declarants who may have publicized negative information to people other than those who are in contract, the plaintiff still has a cause of action against the original declarant for tortious interference with business relations.
Trade libel is the publication of matter disparaging the quality of another's services or product, which is intended to cause and does cause that business financial harm. Computerexpress, Inc. v. Jackson, 98 Cal.App.4th 998, 113 Cal.Rptr.2d 625 (Cal.App. 2001). It does not even have to be false.
A false light claim exists when a publication places the would-be Plaintiff in a false light that would be “highly offensive to a reasonable person.” Godbehere v. Phoenix Newspapers, Inc. 162 Ariz. 335, 783 P.2d 781 (1989) (citing Restatement 2d of Torts, '652E). The information does not have to be false. It can be true, but if it has the effect of dragging someone into the spotlight who has not put themselves there by their own acts or position, it is a “false light” defamation. Most false light claims are also filed, alternatively, as invasions of constitutionally-protected privacy. False Light claims are recognized in Arizona. Id. and in most states.
Restatement of Torts, ' 46(1): "One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another." (See also negligent infliction of emotional distress, Restatement of Torts '' 312-313, 436 and 436(A).)
Mail Fraud and Wire Fraud
Defamations through the mail, over the telephone, fax or by e-mail or internet can be mail fraud (18 U.S.C. ' 1341) or wire fraud (18 U.S.C. ' 1343) entitling the victim to claim for acts of “civil racketeering” under the federal Civil Racketeering Act, 18 U.S.C. ' 1961(1); Sun Sav., 825 F.2d at 195. Such constitutes a predicate offense for a civil racketeering claim.
Mail fraud is defined in 18 U.S.C. ' 1341 as: “devis[ing] or intending to devise any scheme or
artifice to defraud, or ... obtaining money ... by means of false or fraudulent pretenses,
representations, or promises ... [by] plac[ing] in any post office or authorized depository for mail
matter, any matter or thing whatever to be sent or delivered by the Postal Service, or tak[ing] or
receiv[ing] therefrom, any such matter or thing, or knowingly caus[ing] to be delivered by mail ... any
such matter or thing ....” The can also apply to common public carriers who carry U.S. Mail, such as
Fed Ex, UPS and others.
Wire fraud is defined in 18 U.S.C. ' 1343 as the same conduct only by the use of "wire" and "sound"
instead of mail. Telephone, telefax and e-mail all qualify as “wire”.
There is usually little difficulty in proving that the defamers communicated with each other or
others by mail and wire, in furtherance of the overall scheme that defrauded the claimant.
Specific acts of using the mails or telephone need not be established. All Plaintiffs have to show is
that the defendant was or should have been aware of the high probability of fraud and the reasonably
foreseeable use of such means of communication in furtherance of the fraud. Ikuno v. Yip, 912 F.2d
306, 311 (9th Cir. 1990); United States v. Mc¬Donald, 576 F.2d 1350, 1358-60 (9th Cir. 1978).
Moreover, "it is not necessary that the mailing contain fraudulent statements; rather, it suffices legally
if the transmissions advance the execution of the scheme.” Gas Reclamation, 659 F.Supp. at 51.
Privacy Claims and the Lanham Act
The unauthorized use of an individual’s likeness can give rise to common-law or statutory claims for invasion of privacy and violation of an individual’s right of publicity, civil claims under the Lanham Act, and breach of contract claims, among others. The right of publicity is the right of every person to control the commercial use of his or her identity. See McCarthy, The Right of Privacy and Publicity. Arizona recognizes the claim of invasion of a right of publicity. See Pooley v. National Hole-in-One Association, 89 F.Supp 2d 1108 (Dist. Ct. Ariz. 2000). In Pooley, the court noted that the common law right of privacy includes “appropriation, for the defendant's advantage, of the plaintiff's name or likeness.” Id. at 1111. See also Restatement (Second) of Torts § 652(C) (“One who appropriates to his own use or benefit the name or likeness of another is subject to liability to the other for invasion of his privacy.”) The elements for such a cause of action are “(1) the defendant's use of the plaintiff's identity; (2) the appropriation of plaintiff's name or likeness to the defendant's advantage, commercially or otherwise; (3) lack of consent; and (4) resulting injury.” Eastwood v. Superior Court, 198 Cal.Rptr. 342, 346 (1983). A successful plaintiff can recover traditional tort damages, including punitive damages.
Even where a party impliedly consents to use of her image during an employment relationship, absent contractual provisions to the contrary, courts have held that termination of the employment relationship likewise terminates consent to use of the image. See for example, Colgate-Palmolive Co. v. Tullos, 219 F. 2d 617 (5th Cir. 1955); See also, Restatement (Second) of Torts § 892A, comment d (“The terms and reasonable implication of the consent given determine whether it includes the particular conduct….Unless the understanding is made clear by the express language, these questions of interpretation are normally for the trier of fact….Even when no restriction is specified the reasonable interpretation of the consent may limit it to acts at a reasonable time and place, or those reasonable in other respects.”)
Federal claims may also be brought under the Lanham Act (15 U.S.C. § 1125). Under this act, “Any person who . . . uses in commerce any word, term, name, symbol, or device, or any combination thereof . . ., false or misleading description of fact, or false or misleading representation of fact, which– [ ] is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person . . . shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.” Such claims are common companions to successful invasion of privacy claims. See McCarthy, The Right of Privacy and Publicity.
Last, claims under implied contract or unjust enrichment for the unauthorized use of one’s image for commercial gain may be available. To the extent one claims a former employee was compensated for use of her image, when compensation ends, the right to use of the image impliedly ends. See. Restatement (Second) of Torts § 892A, above. An employer who continues to use such images may be forced to disgorge profits derived from such use, or may be liable for unpaid wages compensating such use. Arizona has strict provisions pertaining to unpaid wages, awarding treble damages in some cases.
Think of this the next time you put anyone’s photo or image on a website without express written permission to do that!
In some jurisdiction, the above privacy-oriented or gain-motivated defamations can also be a crime in and of themselves.
One can be liable for “civil conspiracy” by merely conspiring to harm another or to commit the above prohibited acts in a way that harms. "For a civil conspiracy to occur two or more persons must agree to accomplish an unlawful purpose or to accomplish a lawful object by unlawful means, causing damages." Rowland v. Union Hills Country Club, 157 Ariz. 301, 306, 757 P.2d 105 (App. 1988). McElhanon v. Hing, 151 Ariz. 403, 728 P.2d 272 (1986); Elliott v. Videan, 164 Ariz. 113, 791 P.2d 639 (App. 1989); Pearce v. Stone, 149 Ariz. 567, 572, 720 P.2d 542 (App. 1986).Accord Elliott, 164 Ariz. at 116-17; Pearce, 149 Ariz. at 570. "Unlawful includes fraud." Elliott at 116.
All states have statutes, common law or both which prohibit threatening to defame someone if they do not act or refrain from acting in a manner the wrongdoer demands, even if the threatened defamations are true. In most states, it’s the crime of extortion.
All professional licensure rules have provisions requiring the licensee to maintain moral turpitude and engaging in malicious acts against others such as by seriously defaming them is included as morally reprehensible conduct giving rise to question the fitness of the licensee’s ability to practice.
Many professional organizations have codes of ethics which prohibit defaming others or the infliction of damage to others that defamation causes, particularly defamation or damage directed too association members/competitors. See the Code of Ethics for the National Association of Realtors which prohibits such conduct. Sanctions including expulsions can be levied by the organization.
Expanded Liability Due to the Context of the Acts:
If you appear to be or purport to be speaking as an agent for another or for a business in any way, the principal, the business and its owners, officer and directors may also be sued for your wrong, as well. All personal statements also expose spouses to joint liability in community property states and expose partners and affiliates to co-liability in most states. Publication in any medium exposes the medium to co-liability and defaming another while acting under the license of another, such as a broker, exposes that licensee to co-liability.
CONCLUSION: MAMA SAID IT ALL!
Once again as you have surely learned after many years, your Mama was absolutely right about the Rules of Life. She told you over and over again that “if you can’t say something nice about another, don’t say anything at all” and warned you steadfastly not to “take things that aren’t yours without getting the owner’s permission”. And so if as an accomplished professional you find yourself at some point self-righteously forgetting those admonitions, crossing those lines and thinking you are a genius and that all of your business competitors are complete charlatans, that anyone who disagrees with you is a fool, that anyone who does not buy into your values and views is a cretin and that there is no property or right of another you would not expropriate if they were stupid enough to let you..and you want to act on these notions or tell the whole world these views (or even tell the guy next to you at the bar): Carefully recall three other things Mama said and seriously contemplate them before your very next word:
She said “people who live in glass houses ought not throw stones”. She said “pride always precedes the fall”. Last, most importantly, she said “silence is golden.”