USA - NATIONWIDE: An Introduction to First Amendment Litigation: Mainly Plaintiff

Defamation Law’s Moment

Click on a news site or open a newspaper today and you will most likely find something about defamation law. Why the uptick in high-profile defamation lawsuits? Certainly, one reason is that, over the past several years, defamation plaintiffs have won a string of massive settlements and verdicts in cases across the country. Dominion Voting Systems recovered almost USD800 million from Fox News. Before that, Beef Products Inc. got almost USD200 million from ABC News. Families of children murdered at Sandy Hook Elementary School won a USD965 million verdict against Alex Jones. It often pays, in short, to litigate defamation claims.

Maybe the biggest reason for the surge in defamation litigation, however, is the changing nature of reputation. In the modern attention economy, reputation is a uniquely valuable currency. It dictates whether people pay attention to you. It is the prism through which people interpret what you say and do. And it determines the extent to which people trust you or your products or services. Now, more than ever, reputation is everything.

The growing importance of reputation is matched only by the increased ease with which reputations can be tarnished or destroyed. Thanks to the internet, defamatory falsehoods are immediately accessible everywhere on earth. A Wichita blogger’s hit piece can instantly become a conversation item in New York, London, Dubai, Shanghai, and everywhere in between. And once defamatory falsehoods spread online, it can be impossible to completely remove them. As the saying goes: The internet is forever.

Defamation law provides one of the only remedies for people and businesses looking to protect or reclaim the reputations they spent lifetimes building. Small wonder, then, that people and businesses are increasingly turning to it to address the threats to reputation presented by the modern world.

Defamation law and opinions: addressing some confusion

As much as defamation law finds itself in the spotlight today, aspects of it remain widely misunderstood. Most notable among them is the relationship between defamation law and expressions of opinion. A hypothetical scenario shows the problem.

Imagine a leading podcaster tells millions of listeners that he suspects something nefarious is happening at NewCo, an up-and-coming business that just had its initial public offering. “In my opinion,” the podcaster says, “NewCo’s founder is an embezzler; it’s the only way she could’ve gotten the money to start the company”. A social-media dogpile ensues, NewCo’s share price nosedives, and suddenly the company’s future is in jeopardy. The founder contemplates suing the podcaster for defamation, but there’s a problem: The podcaster explicitly framed his statement as an opinion, and the founder has heard that an opinion cannot be the basis for a defamation claim. Is she out of luck?

Not necessarily. While it is a common belief that a statement of opinion cannot form the basis for a defamation lawsuit, the legal reality is far more nuanced. So long as a statement – even one explicitly couched as an opinion – would be understood by a reasonable listener as expressing or implying a factual assertion, it can give rise to a defamation claim. It is likely that many individuals and companies forego asserting potential defamation claims because they mistakenly think there is something talismanic about expressions such as “in my opinion,” “I believe,” or “it seems to me.” This is not the case.

It is true, of course, that some expressions of “pure” opinion really are protected. Statements limited to conveying the speaker’s subjective tastes – “it was the worst book I’ve ever read” or “their clothing is not worth the price” – are not actionable, since they do not assert verifiable facts and cannot be proven false. Likewise, expressions of opinion are nonactionable when they are based on true information that is disclosed to, or already known by, the public – the theory being that, given the true facts, members of the public can decide for themselves how much stock to put in the speaker’s assessment. But that still leaves a wide swath of opinion-like statements that can indeed be actionable.

Separating actionable from nonactionable expressions of opinion

Distinguishing actionable defamatory expressions of opinion from nonactionable ones can be difficult. A lot depends on context. Most actionable expressions of opinion, however, fit into either of two buckets.

• Opinions implying undisclosed and defamatory facts – a short-seller tweets “I suspect Company X is unlawfully sending kickbacks to Fred”. If Company X is not, in fact, sending unlawful kickbacks to Fred, the investor’s tweet would be actionably defamatory, even though it’s framed as a mere suspicion. Why? Because the tweet implies undisclosed and defamatory facts – specifically, that the investor has information, not shared in his tweet, supporting a conclusion that Company X is unlawfully sending kickbacks to Fred. As the law rightly recognises, such a false and defamatory implication can be every bit as damaging as an explicit factual assertion.
• Expressions of opinion that include statements that are themselves false and defamatory – a congressional candidate tells her supporters that a company “wrongfully fired its HR director because of the director’s stepson”. The statement’s thrust – that the company “fired its HR director because of the director’s stepson” – is plainly a factual assertion that would be actionably defamatory if false. Does it matter that the candidate added to it her subjective opinion that the firing was “wrongful”? No, because that statement of opinion does not change or detract from her factual assertion about the company’s reason for firing its HR director. A defamatory factual assertion does not become nonactionable just because the publisher places it alongside a statement of opinion.

Ultimately, determining the distinction between a protected, “pure” opinion and a statement that conveys actionable factual assertions is not always easy. Context is often determinative. Take the word “scam”, which sometimes expresses pure opinion and sometimes asserts or implies facts, depending on how it is used. Recently, Meier Watkins Phillips won a ruling that the word “scam” was not in the vein of opinion when the defendant used it in a self-styled investigative report about the plaintiff’s failed business venture. In that context, the court explained, readers would naturally understand “scam” to mean exactly what it sounds like: a factual accusation that the plaintiff engaged in fraudulent financial conduct. In deciding whether “scam” asserted or implied false facts in that case, the particular circumstances made all the difference.

Expressions of opinion are not immune to defamation claims

The bottom line, as the U.S. Supreme Court remarked more than 35 years ago, is that there is no “wholesale defamation exemption for anything that might be labeled ‘opinion’”. If a statement makes a false assertion of fact – expressly or by implication – that assertion can be actionable, even if it’s couched as a matter of opinion. Anyone saying otherwise is, as a matter of fact, simply wrong.