California Civil Jury Instructions (CACI) (2017)

1731. Trade Libel—Essential Factual Elements

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1731.Trade Libel—Essential Factual Elements
[Name of plaintiff] claims that [name of defendant] harmed [him/her] by
making a statement that disparaged [name of plaintiff]’s [specify product].
To establish this claim, [name of plaintiff] must prove all of the
following:
1. That [name of defendant] made a statement that [would be clearly
or necessarily understood to have] disparaged the quality of
[name of plaintiff]’s [product/service];
2. That the statement was made to a person other than [name of
plaintiff];
3. That the statement was untrue;
4. That [name of defendant] [knew that the statement was untrue/
acted with reckless disregard of the truth or falsity of the
statement];
5. That [name of defendant] knew or should have recognized that
someone else might act in reliance on the statement, causing
[name of plaintiff] financial loss;
6. That [name of plaintiff] suffered direct financial harm because
someone else acted in reliance on the statement; and
7. That [name of defendant]’s conduct was a substantial factor in
causing [name of plaintiff]’s harm.
New December 2013; Revised June 2015
Directions for Use
The tort of trade libel is a form of injurious falsehood similar to slander of title.
(See Polygram Records, Inc. v. Superior Court (1985) 170 Cal.App.3d 543, 548
[216 Cal.Rptr. 252]; Erlich v. Etner (1964) 224 Cal.App.2d 69, 74 [36 Cal.Rptr.
256].) The tort has not often reached the attention of California’s appellate courts
(see Polygram Records, Inc., supra, 170 Cal.App.3d at p. 548.), perhaps because of
the difficulty in proving damages. (See Erlich,supra, 224 Cal.App.2d at pp.
73–74.)
Include the optional language in element 1 if the plaintiff alleges that
disparagement may be reasonably implied from the defendant’s words.
Disparagement by reasonable implication requires more than a statement that may
conceivably or plausibly be construed as derogatory. A “reasonable implication”
means a clear or necessary inference. (Hartford Casualty Ins. Co. v. Swift
Distribution, Inc. (2014) 59 Cal.4th 277, 295 [172 Cal.Rptr.3d 653, 326 P.3d 253].)
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Elements 4 and 5 are supported by section 623A of the Restatement 2d of Torts,
which has been accepted in California. (See Melaleuca, Inc. v. Clark (1998) 66
Cal.App.4th 1344, 1360–1361 [78 Cal.Rptr.2d 627].) There is some authority,
however, for the proposition that no intent or reckless disregard is required
(element 4) if the statement was understood in its disparaging sense and if the
understanding is a reasonable construction of the language used or the acts done by
the publisher. (See Nichols v. Great Am. Ins. Cos. (1985) 169 Cal.App.3d 766, 773
[215 Cal.Rptr. 416].)
The privileges of Civil Code section 47 almost certainly apply to actions for trade
libel. (See Albertson v. Raboff (1956) 46 Cal.2d 375, 378–379 [295 P.2d 405]
[slander-of-title case]; 117 Sales Corp. v. Olsen (1978) 80 Cal.App.3d 645, 651
[145 Cal.Rptr. 778] [publication by filing small claims suit is absolutely
privileged].) The defendant has the burden of proving privilege as an affirmative
defense. (See Smith v. Commonwealth Land Title Ins. Co. (1986) 177 Cal.App.3d
625, 630–631 [223 Cal.Rptr. 339].) If privilege is claimed, additional instructions
will be necessary to state the affirmative defense and frame the privilege. For
further discussion, see the Directions for Use to CACI No. 1730, Slander of
Title—Essential Factual Elements. See also CACI No. 1723, Common Interest
Privilege—Malice.
Limitations on liability arising from the First Amendment apply. (Hofmann Co. v.
E. I. du Pont de Nemours & Co. (1988) 202 Cal.App.3d 390, 397 [248 Cal.Rptr.
384]; see CACI Nos. 1700–1703, instructions on public figures and matters of
public concern.) See also CACI No. 1707, Fact Versus Opinion.
Sources and Authority
• “Trade libel is the publication of matter disparaging the quality of another’s
property, which the publisher should recognize is likely to cause pecuniary loss
to the owner. [Citation.] The tort encompasses ‘all false statements concerning
the quality of services or product of a business which are intended to cause that
business financial harm and in fact do so.’ [Citation.] [¶] To constitute trade
libel, a statement must be false.” (City of Costa Mesa v. D’Alessio Investments,
LLC (2013) 214 Cal.App.4th 358, 376 [154 Cal.Rptr.3d 698].)
• “To constitute trade libel the statement must be made with actual malice, that is,
with knowledge it was false or with reckless disregard for whether it was true
or false.” (J-M Manufacturing Co., Inc. v. Phillips & Cohen LLP (2016) 247
Cal.App.4th 87, 97 [201 Cal.Rptr.3d 782].)
• “The distinction between libel and trade libel is that the former concerns the
person or reputation of plaintiff and the latter relates to his goods.” (Shores v.
Chip Steak Co. (1955) 130 Cal.App.2d 627, 630 [279 P.2d 595].)
• “[A]n action for ‘slander of title’ . . . is a form of action somewhat related to
trade libel . . . .” (Erlich, supra, 224 Cal.App.2d at p. 74.)
• “Confusion surrounds the tort of ‘commercial disparagement’ because not only
is its content blurred and uncertain, so also is its very name. The tort has
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received various labels, such as ‘commercial disparagement,’ ‘injurious
falsehood,’ ‘product disparagement,’ ‘trade libel,’ ‘disparagement of property,’
and ‘slander of goods.’ These shifting names have led counsel and the courts
into confusion, thinking that they were dealing with different bodies of law. In
fact, all these labels denominate the same basic legal claim.” (Hartford Casualty
Ins. Co., supra, 59 Cal.4th at p. 289.)
• “The protection the common law provides statements which disparage products
as opposed to reputations is set forth in the Restatement Second of Torts
sections 623A and 626. Section 623A provides: ‘One who publishes a false
statement harmful to the interests of another is subject to liability for pecuniary
loss resulting to the other if [P] (a) he intends for publication of the statement
to result in harm to interests of the other having a pecuniary value, or either
recognizes or should recognize that it is likely to do so, and [P](b) he knows
that the statement is false or acts in reckless disregard of its truth or falsity.’ [¶]
Section 626 of Restatement Second of Torts in turn states: ‘The rules on
liability for the publication of an injurious falsehood stated in § 623A apply to
the publication of matter disparaging the quality of another’s land, chattels or
intangible things, that the publisher should recognize as likely to result in
pecuniary loss to the other through the conduct of a third person in respect to
the other’s interests in the property.’ ” (Melaleuca, Inc., supra, 66 Cal.App.4th
at pp. 1360–1361, original italics.)
• “According to section 629 of the Restatement Second of Torts (1977), ‘[a]
statement is disparaging if it is understood to cast doubt upon the quality of
another’s land, chattels or intangible things, or upon the existence or extent of
his property in them, and [¶] (a) the publisher intends the statement to cast the
doubt, or [¶] (b) the recipient’s understanding of it as casting the doubt was
reasonable.’ ” (Hartford Casualty Ins. Co.,supra, 59 Cal.4th at p. 288.)
• “What distinguishes a claim of disparagement is that an injurious falsehood has
been directed specifically at the plaintiff’s business or product, derogating that
business or product and thereby causing that plaintiff special damages.”
(Hartford Casualty Ins. Co.,supra, 59 Cal.4th at p. 294, original italics.)
• “The Restatement [2d Torts] view is that, like slander of title, what is
commonly called ‘trade libel’ is a particular form of the tort of injurious
falsehood and need not be in writing.” (Polygram Records, Inc., supra, 170
Cal.App.3d at p. 548.)
• “While . . . general damages are presumed in a libel of a businessman, this is
not so in action for trade libel. Dean Prosser has discussed the problems in such
actions as follows: ‘Injurious falsehood, or disparagement, then, may consist of
the publication of matter derogatory to the plaintiff’s title to his property, or its
quality, or to his business in general, . . . The cause of action founded upon it
resembles that for defamation, but differs from it materially in the greater
burden of proof resting on the plaintiff, and the necessity for special damage in
all cases. . . . [The] plaintiff must prove in all cases that the publication has
played a material and substantial part in inducing others not to deal with him,
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and that as a result he has suffered special damages. . . . Usually, . . . the
damages claimed have consisted of loss of prospective contracts with the
plaintiff’s customers. Here the remedy has been so hedged about with
limitations that its usefulness to the plaintiff has been seriously impaired. It is
nearly always held that it is not enough to show a general decline in his
business resulting from the falsehood, even where no other cause for it is
apparent, and that it is only the loss of specific sales that can be recovered. This
means, in the usual case, that the plaintiff must identify the particular
purchasers who have refrained from dealing with him, and specify the
transactions of which he claims to have been deprived.’ ” (Erlich, supra, 224
Cal.App. 2d at pp. 73–74.)
• “Because the gravamen of the complaint is the allegation that respondents made
false statements of fact that injured appellant’s business, the ‘limitations that
define the First Amendment’s zone of protection’ are applicable. ‘[It] is
immaterial for First Amendment purposes whether the statement in question
relates to the plaintiff himself or merely to his property . . . .’ ” (Hofmann Co.,
supra, 202 Cal.App.3d at p. 397, internal citation omitted.)
• “If respondents’ statements about appellant are opinions, the cause of action for
trade libel must of course fail. ‘Under the First Amendment there is no such
thing as a false idea. However pernicious an opinion may seem, we depend for
its correction not on the conscience of judges and juries but on the competition
of other ideas. But there is no constitutional value in false statements of fact.’
Statements of fact can be true or false, but an opinion—‘a view, judgment, or
appraisal formed in the mind . . . [a] belief stronger than impression and less
strong than positive knowledge’—is the result of a mental process and not
capable of proof in terms of truth or falsity.” (Hofmann Co., supra, 202
Cal.App.3d at p. 397, footnote and internal citation omitted.)
• “[I]t is not absolutely necessary that the disparaging publication be intentionally
designed to injure. If the statement was understood in its disparaging sense and
if the understanding is a reasonable construction of the language used or the
acts done by the publisher, it is not material that the publisher did not intend
the disparaging statement to be so understood.” (Nichols, supra, 169 Cal.App.3d
at p. 773.)
• “Disparagement by ‘reasonable implication’ requires more than a statement that
may conceivably or plausibly be construed as derogatory to a specific product
or business. A ‘reasonable implication’ in this context means a clear or
necessary inference.” (Hartford Casualty Ins. Co.,supra, 59 Cal.4th at p. 295,
internal citations omitted.)
Secondary Sources
5 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 642–645
3Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts,
§ 40.70 et seq. (Matthew Bender)
30 California Forms of Pleading and Practice, Ch. 340, Libel and Slander,
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§ 340.103 (Matthew Bender)
1 Matthew Bender Practice Guide: California Unfair Competition and Business
Torts, Ch. 9, Commercial Defamation, 9.04
1732–1799. Reserved for Future Use
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