Business Disparagement
A Texas tort for false, disparaging statements about a business's products, services or commercial activity that cause economic loss. Also called injurious falsehood or trade libel. The plaintiff must prove malice, lack of privilege and special damages, a heavier burden than a private-figure defamation claim carries.
Business disparagement is the publication of false, disparaging information about a business, with malice and without privilege, causing special (economic) damages. The elements come from Forbes Inc. v. Granada Biosciences, Inc., 124 S.W.3d 167, 170 (Tex. 2003), as restated in In re Lipsky, 460 S.W.3d 579 (Tex. 2015).
Business disparagement protects a company's economic interests rather than its good name. The claim reaches false statements that cast aspersions on a business's product or commercial activity and so cost it trade, for example a false claim that a product is unsafe or that a company has stopped operating. It is a common-law claim in Texas, and no general statute defines it.
The same false statement can support both disparagement and defamation. A business seeking economic losses pleads disparagement. Reputational harm and other non-economic damages are recovered, if at all, through defamation.
- Governing law
- Texas common law, (Forbes, 124 S.W.3d at 170)
- Fault
- Malice, a higher bar than the negligence standard for private-figure defamation
- Damages
- Special (economic) damages only, never presumed, (Lipsky, 460 S.W.3d 579)
- Food products
- Separate statutory claim for knowingly false safety statements, (Tex. Civ. Prac. & Rem. Code § 96.002)
How disparagement differs from defamation
Both torts involve harm from false information. Defamation chiefly protects personal reputation, while disparagement protects economic interests (Lipsky, 460 S.W.3d 579, quoting Forbes). A statement can damage a company's standing without touching its sales, and the reverse is also possible.
The differences show up at trial. Disparagement requires malice whatever the plaintiff's status, while a private plaintiff in a defamation case need only prove negligence. Defamation per se allows general damages to be presumed. Disparagement allows nothing to be presumed: the plaintiff must prove a specific economic loss caused by the statement.
Proving special damages
Special damages are economic losses, such as lost sales or a lost contract, as distinct from general damages like injury to reputation or mental anguish. In Lipsky a gas producer offered an executive's affidavit stating that the defendant's statements caused "direct pecuniary and economic losses," lost profits and damages above three million dollars. The court held the affidavit conclusory and insufficient to show the special damages the disparagement claim requires, because it gave no facts showing how the statements caused any loss.
Disparagement claims and the TCPA
Disparagement suits often concern statements on matters of public concern, so the Texas Citizens Participation Act frequently applies. The Act exempts many claims against a seller over statements arising from the sale of goods or services to an actual or potential customer (Tex. Civ. Prac. & Rem. Code § 27.010(a)(2)). That exemption does not reach claims over consumer reviews, ratings or commentary about a business (§ 27.010(b)(2)), which remain subject to an early motion to dismiss.
Elements of business disparagement
- The defendant published false and disparaging information about the plaintiff.
- The defendant acted with malice.
- The publication was made without privilege.
- The publication caused the plaintiff special damages.
What is the legal definition of disparagement in Texas?
Disparagement, also called injurious falsehood, is a false and derogatory publication about a plaintiff's economic or commercial interests. The Supreme Court of Texas adopted that description in In re Lipsky, 460 S.W.3d 579 (Tex. 2015). The tort addresses aspersions on a business's product or commercial activity. Dignitary harm to the owner is outside it. Outside tort law, "disparagement" also appears in contracts as a non-disparagement covenant, which is a different obligation enforced as a contract term.
Is there a law in Texas about defaming beef?
Not one aimed at beef alone. Texas has a statute on false statements about perishable food products, and beef is covered only when sold in a form that spoils within a limited time (Tex. Civ. Prac. & Rem. Code § 96.001). Section 96.002 makes a person liable to the producer of a perishable food product for publicly spreading information the person knows is false and that states or implies the product is unsafe to eat. In deciding falsity, the trier of fact considers whether the information was based on reasonable and reliable scientific inquiry, facts or data (§ 96.003).
How hard is it to prove business disparagement in Texas?
The burden is heavier than in a private-figure defamation case, because the plaintiff must prove malice and an actual economic loss caused by the statement, with no presumed damages. When the TCPA applies, that proof must come early and as clear and specific evidence of each element (Tex. Civ. Prac. & Rem. Code § 27.005(c)). In Lipsky a general affidavit about lost profits failed that test as proof of the disparagement claim's special damages.
Disparagement claims tend to arise between competitors, between a company and a former insider, and between a company and an unhappy customer who goes public. Damages is the element on which the disparagement claim in Lipsky failed. A business that cannot connect the statement to an identifiable lost sale, customer or contract may be left with a defamation claim alone.
- Timing matters early: if the claim is also pleaded as libel or slander, the one-year limitations period for those claims applies to that part of the case (Tex. Civ. Prac. & Rem. Code § 16.002), and the TCPA gives a defendant 60 days after service to move to dismiss (§ 27.003(b)).
- Records tying the statement to specific lost customers, orders or contracts are commonly assembled before suit, since general statements of lost profits were held insufficient in Lipsky.
- Where the statement may also be defamatory, the written correction request under the Defamation Mitigation Act is commonly sent within 90 days to preserve exemplary damages on that claim (§ 73.055(c)).
- A Texas lawyer who handles business tort litigation can assess whether the facts support disparagement, defamation or both.