For a company to prevail in a lawsuit in New York against a customer or client for posting, on an internet site, comments criticizing the company, the company must prove falsity, malice and special damages. In practice, lawsuits by a business against a person for posting, online, negative comments about the business usually fail, either because the defendants’ comments are protected opinion or because the business cannot prove special damages.
New York recognizes a tort involving defamation of a product or a service. This civil cause of action, which encompasses online comments disparaging a business, is sometimes called “injurious falsehood.” Its elements are falsity, malice and special damages.
Special damage means pecuniary damage, that is, direct financial loss, which must be asserted with sufficient particularity. When the special damage claimed is loss of customers, the proof must establish the particular persons who ceased to be or refused to become customers. General proof of loss of customers is not sufficient. In most cases, a business which a disgruntled customer or client disparages online cannot prove that the online disparagement caused the business to lose, or prevented the business from gaining, specific customers. As a result, most lawsuits by companies against individuals who post, online, negative reviews of the companies fail for lack of provable special damages.
Further, statements of opinion (online or otherwise) that do not imply a defamatory statement of fact are not actionable. For example, “Joe’s Diner serves terrible food” is a non-actionable statement of opinion. By contrast, “Joe’s Diner was fined this year by the New York City Department of Health for serving contaminated food” is a statement of fact which, if false, could give rise to an injurious falsehood claim by the eatery. Many suits by businesses against people who post, online, denigratory comments about the businesses fall short because the online comments are privileged expressions of opinion.
It should also be noted that a business cannot successfully sue an “interactive computer service,” such as Facebook, for defamation or other, non-intellectual property, state law claims arising from content posted by the business’s customers or clients. This is the case because the federal Communications Decency Act of 1996, 47 U.S.C. § 230 et seq., immunizes internet service providers from defamation and other, non-intellectual property, state law claims arising from third-party content. See Shiamili v. Real Estate Group of N.Y., Inc., 2009 N.Y. Slip. Op. 09403 (1st Dep’t Dec. 17, 2009); Finkel v. Facebook, Inc., No. 102578/09, 2009 Slip Op. 32248(U) (N.Y. Sup. Ct. N.Y. County Sept. 15, 2009).
In sum, before a business sues a discontented customer or client in New York for disparaging the business online, the business should consult with knowledgeable counsel to ensure that more is at stake than hurt feelings.
If your company wants to bring, or needs a lawyer to defend it in, business litigation and you are located in the New York City area, call Attorney David S. Rich at (212) 209-3972.