SW Legal studies in Business

Commercial Defamation Requires Negligence, Not Actual Malice
Description

New Jersey high court held that one business could sue another for commercial defamation based on negative statements made to customers that were negligent. Plaintiff did not need to prove actual malice by the defendant to be able to prevail.

Topic Torts
Key Words

Commercial Defamation; Negligence

C A S E   S U M M A R Y
Facts

Senna owned Wildwood Fascination, an arcade game on the boardwalk in New Jersey. His rival, defendant Florimont, ran Olympic Fascination, which operated nearby as a direct competitor. Fascination is a competitive game of chance regulated by the New Jersey Chance Control Commission. Winners get tickets that can be redeemed for prizes. Senna was told that staff members from Olympic were telling customers that Wildwood would not honor prize tickets and otherwise said negative things about the business. Senna closed the business and reopened it later under a new name, Flipper’s Fascination. In the summer of 2003, Olympic broadcast over a public address system that Flipper’s was “dishonest” and “a crook” and other negative comments. They told customers that Flipper’s did not honor winning tickets. Senna sued Florimont, contending that he defamed his business and tortuously interfered with his ability to conduct business at Flipper’s. The trial court dismissed the suit, holding that actual malice had not been shown. Senna appealed.

Decision

Reversed and remanded. Commercial speech is expression that predominantly relates to the economic interest of the speaker. Negligence, not actual malice, is the common law standard in defamation actions such as this one involving commercial speech. Olympic broadcast that Flipper’s was “dishonest” and “screwed all of his customers.” This was purely commercial, not a political commentary. There was no public interest involved. It was intended to drive customers away from Flipper’s. If the statements were truthful, there could be no cause of action. But Florimont could not show that he had evidence that Senna was dishonest. The Commission that regulated the business had no problem with the way it was run. Suit will proceed to trial.

Citation

Senna v. Florimont, 958 A.2d 427 (Sup. Ct., N.J., 2008)

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