Defamation: When Careless Words Can Be Costly

Most of us are familiar with reports of Hollywood movie stars suing tabloid publications for printed articles containing false information. Business owners may be surprised to learn that they too can be sued based on the same legal principles, known as defamation law. Exposure to such claims may arise when employees, perhaps unwittingly, make false statements about another person or business. In fact, a private person can prove such a case with a lesser standard of proof than is required when a "public figure" sues. As with any potential claim, knowledge of the rules is the key to loss avoidance.

Defamation refers to a category of civil claims based on false statements which are "published," meaning spoken or expressed in writing, to a third party. Though defamation claims are frequently asserted against commercial publications, such as newspapers, defamation can also occur in a private setting, arising out of a letter or a conversation. In the business setting, it is therefore important that the content of communications, particularly those which are written or circulated to a wide audience, be accurate and fair.

Georgia's tort law of defamation includes claims for libel and slander. A libel is a false and malicious defamation of another, expressed in print, writing, pictures, or signs, tending to injure the reputation of the person and exposing that person to "public hatred, contempt or ridicule." "Malice," as used in the foregoing definition, means ill-will, hatred or charges calculated to injure. This is a lesser standard than that required to show "malice" when constitutional, free speech rights are at issue, the standard to which newspapers are held when discussing public figures. "Malice" in this latter context means knowledge of falsity or reckless disregard of whether a statement is false.

Slander, or oral defamation, occurs when a statement is uttered to a third party which is false and malicious. Some statements are considered so offensive that malice is implied and need not be affirmatively shown. Statements in this category include imputing to another person a crime punishable by law, or making charges against another in reference to that person's trade, office or profession which are likely to injure that person in his or her business. The crime need not be a felony; it is sufficient that a person has been accused of being guilty of a misdemeanor. Statements in the categories discussed in this paragraph do not require proof of actual damages either, contrary to most civil claims for money damages. The reason for this rule is that damage to a claimant's reputation can be presumed when the statement is sufficiently offensive, and also because reputation damages are difficult to prove.

Georgia law treats libel slightly more seriously than it does slander, because a libel involves the deliberate act of expressing defamation in writing, a relatively permanent form. Consequently, certain statements are considered actionable libel without a showing of damages, when the same statements would require proof of damages in a case of spoken defamation. Claims in this category include false statements that a person has engaged in acts of dishonesty or immorality.

In recent decades, some aspects of state defamation law were held unconstitutional by federal courts, to protect constitutional guarantees of free speech from being over-ridden by individual state laws. There is a continuing federal standard which applies to all states with respect to statements about public figures, based on the notion that politicians and other persons who choose to become widely known voluntarily subject themselves to public scrutiny and thereby forfeit a certain degree of privacy. However, the federal courts have deferred to state law in recent years with respect to claims involving private figures. Under Georgia law, a private figure can recover damages for defamation upon a showing of simple fault or negligence. This is contrasted with claims against public figures who must make a showing that the statements alleged to be defamatory were known to be false or made with reckless disregard as to their truth or falsity.

In the business context, defamation claims can conceivably surface in many ways. For example, letters to the editors which are published in a local newspaper have been the source of suits in Georgia against the author of the letter. Personnel departments may also have exposure for this type of claim if disparaging statements are made concerning former employees. It is important to have a policy requiring careful consideration of statements which are released to any third party concerning a former employee. Adverse statements can have a significant impact on a former employee's livelihood, and, for that reason, such statements can be particularly injurious. There are certain absolute defenses to defamation claims, most notably truth and privilege. If the person making the statement can prove that it was true, no matter how unflattering or derogatory, it is an absolute defense to a defamation claim. Certain other categories of statements are absolutely privileged, such as statements made during the course of legal proceedings. Georgia law also provides for certain conditional privileges as a defense to defamation claims. One such privilege is a good faith statement made on a subject in which the party making the statement has a significant interest. Conditional privileges will not apply, however, if they are merely used as a cloak for venting private malice. Consequently, the issue of conditional privileges, like most issues in defamation cases, is usually a question for the jury. In a case where jury questions are presented, the defendant can look forward to years of litigation before getting his or her day in court.

In light of the potential for defamation claims, businesses should implement appropriate policies and procedures to reduce exposure to such claims. Depending upon the nature of the business, it might also be appropriate to evaluate whether adequate insurance coverage has been purchased for potential defamation claims, and, if not, whether such coverage should be acquired.