Brief Fact Summary. The Plaintiff, Testing Systems, Inc. (Plaintiff) and the Defendant, Magnaflux Corp. (Defendant), are both engaged in the same trade. The Defendant published statements saying the United States Government had tested the Plaintiff’s product and the Defendant’s product and found the Defendant’s product to be 40% more effective. This statement was untrue.
Synopsis of Rule of Law. For a party to sustain an action for trade libel, they must show that the defendant made statements that are false and that these statements led to a loss of business.
Issue. Should the Defendant’s motion to dismiss the Plaintiff’s claim for failure to state a case be upheld?
Held. Yes, unless the Plaintiff can amend the claim to include specific clients he lost because of the Defendant’s slander, within thirty days.
* Normally, puffery and comparison between one’s own product and another’s product is not actionable. Saying one’s own product is superior to a competitor is mere opinion. In this case, however, the Defendant made specific claims about the government testing both products, finding the Plaintiff’s to be inferior and deciding to use the Defendant’s product instead. These are specific claims that are untrue and are actionable.
* In a case where the Defendant’s actions are “libelous per se” the Plaintiff need not specify damages.
* This case does not reach the level of “libelous per se”. Therefore, the Plaintiff must specify what damages the Plaintiff has suffered by stating the loss of particular customers name or showing a loss of profits after the statements that can be traced back to the statements.
If the plaintiff desired to predicate its right to recover damages upon general loss of custom, it should have alleged facts showing an established business, the amount of sales for a substantial period preceding the publication, the amount of sales subsequent to the publication, facts showing that such loss in sales were the natural and probable result of such publication, and facts showing that plaintiff could not allege the names of particular customers who withdrew or withheld their custom.View Full Point of Law