California Business Divorce: The Unfortunate, and Common, Reality of Defamation After a Business Divorce
So you carefully negotiated a dissolution or separation from your former business partner in what seemed like an amicable parting… but then you wound up in litigation anyway. “How is that possible?” you ask. Unfortunately, it happens all the time when former business partners begin competing for the same customers. Former partners often can’t help but say they are the better choice – particularly given what they know or think they know about their former partner.
Post-divorce defamation is a frequent reality that brings up a host of legal issues. Here are our “Top 5” questions/considerations when faced with a former business partner who has nothing nice to say about you:
1. Is this really defamation or just an opinion? Unfortunately, you can’t sue someone for being a jerk. In California, defamation is a false statement of fact made to a third party about another person, which causes harm to that person’s property, business, trade, profession, or occupation. Whether rumors, exaggerations, or gossip rise to the level of an actionable false statement of fact can be hotly contested. Defamation includes slander, which usually is an oral statement, and libel, which is a statement in print or fixed media, including social media.
2. Does the alleged defamation implicate an Anti-SLAPP motion? In California, a defendant in a defamation case may file a special anti-SLAPP motion, which asks the court to dismiss the defamation case, if the defendant can show they are likely to win the defamation case and the lawsuit is based on a “protected” activity such as speaking at a public forum about an issue of public interest, testifying in a judicial proceeding, or exercising your constitutional right to free speech.
3. Does the litigation privilege apply? Apart from truth, one powerful tool in the defense of a defamation case is the litigation privilege. That privilege applies to a communication made in a judicial or quasi-judicial proceeding by a litigant, or certain other participants, to achieve the object of the litigation and has some connection or logical relation to the action. Generally, to ensure that litigants have utmost freedom of access to the courts without fear of being the subject of a second lawsuit, the litigation privilege protects conduct, even if it is alleged to be defamatory or fraudulent.
4. Was the defamation made on social media and what actions can be taken to take the posts down? In addition to a defamation lawsuit, a person who is the subject of a defamatory statement on a social media site may be able to take steps against the social media provider to remove the defamatory statement. This depends largely on each site’s rules and policies, and it typically requires a takedown request.
5. Is confidentiality an issue? A defamatory statement can implicate confidentiality concerns of the business or its customers. Careful steps need to be taken in such cases to ensure confidential information does not become available to the general public in an open defamation lawsuit. In Hurvitz v. Hoefflin, 84 Cal. App. 4th 1232 (2000), because such steps were not taken, confidential medical information about famous celebrities became public knowledge in a defamation lawsuit between two business partners, and thus the court of appeal later refused to seal court records containing that information.
When a seemingly straightforward business separation or dissolution turns ugly after the fact, make sure you arm yourself with litigators who know the terrain of defamation. A particularly complex area of the law, defamation requires subject matter expertise and experience. If you have questions about any of these issues, please give us a call.
