Trade libel is an intentional disparagement of the quality of services or product of a business that results in pecuniary damage to the plaintiff. (J-M Manufacturing Co., Inc. v. Phillips & Cohen LLP (2016) 247 Cal.App.4th 87, 97 citing City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376.; see also ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010; Polygram Records, Inc. v. Superior Court (1985) 170 Cal.App.3d 543, 548; CACI 1731.)

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. City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376 citing ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1010. Trade libel also requires a showing by plaintiff that “it actually suffered some pecuniary loss.” (J-M Manufacturing, supra 247 Cal.App.4th at 97.)

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.” City of Costa Mesa v. D’Alessio Investments, LLC (2013) 214 Cal.App.4th 358, 376. “To constitute trade libel, a statement must be false.” Id.

The tort of trade libel is a form of injurious falsehood similar to slander of title. See Polygram Records, Inc. v. Super. Ct. (1985) 170 Cal.App.3d 543, 548; Erlich v. Etner (1964) 224 Cal.App.2d 69, 74.

Trade libel requires a statement that is false and “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.” Id.; see also Hartford Casualty Insurance Co. v. Swift Distribution, Inc. (2014) 59 Cal.4th 277, 291.

A claim for trade libel must be pled specifically and to survive a demurrer the complaint must set forth the specific statements alleged to be harmful. (Industrial Waste & Debris Box Service, Inc. v. Murphy (2016) 4 Cal.App.5th 1135, 1157; Vogel v. Felice (2005) 127 Cal.App.4th 1006, 1017, fn. 3 (“[T]he words constituting an alleged libel must be specifically identified, if not pleaded verbatim, in the complaint.”).)

Elements of Trade Libel

The elements of a claim of trade libel are:

1. publication of an “[i]njurious falsehood, or disparagement... of the publication of matter derogatory to the plaintiff’s title to his property, or its quality, or to his business in general;”
2. which induces others not to deal with plaintiff; and
3. special damages.

Nichols v. Great American Ins. Companies (1985) 169 Cal.App.3d 766, 773; see also, ComputerXpress, Inc. v. Jackson (2001) 93 Cal.App.4th 993, 1011 (generally discussing elements); J-M Manuf. Co., Inc. v. Phillips & Cohen LLP (2016) 247 Cal.App.4th 87, 97; also CACI no. 1731.

“Trade libel is defined as an intentional disparagement of the quality of property, which results in pecuniary damage to plaintiff.... ‘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,... [T]he plaintiff must prove in all cases that the publication has played a material and substantial part inducing others not to deal with him, 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.’” Nichols, supra, 169 Cal.App.3d at 773 citing Erlich v. Etner (1964) 224 Cal.App.2d 69, 73. “[N]otwithstanding, it 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. Rest.2d Torts, Sec. 629, com. f, at 350. The possibility of liability for negligent disparagement is crucial in the instant case, because if defendant’s conduct was intentional... there was no ‘occurrence’ as defined by the policies.” Id; see also Hartford Casualty Ins. Co. (2014) 59 Cal.4th 299, 295. “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. (2014) 59 Cal.4th 299, 295 (citations omitted).

Trade Libel vs. Defamation

Trade libel differs from defamation in that the plaintiff “must prove special damages in the form of pecuniary loss; he must carry the burden of proving that the disparaging statement is false; and ‘such personal elements of damage as mental distress have been strictly excluded from these claims.’” Guess v. Super. Ct. (1986) 176 Cal.App.3d 473, 479 (citation omitted); see Polygram Records v. Super. Ct. (1985) 170 Cal.App.3d 543, 549 (citing the text distinguishing trade libel and defamation).

Statute of Limitations

The statute of limitations for a trade libel claim is two years pursuant to Civ. Proc. Code § 339.

A party may raise the statute of limitations as a basis for challenging the sufficiency of a pleading, it must be shown that the statute clearly and affirmatively bars the action. (E-Fab, Inc. v. Accountants, Inc. Services (2007) 153 Cal.App.4th 1308, 1315-16.)

Damages

Unlike “ordinary” libel, general damages are not presumed in a trade libel cause of action. To recover for trade libel, there is a greater burden of proof resting on the plaintiff to show special damage in all cases. (Erlich v. Etner (1964) 224 Cal.App.2d 69, 73-74.)

The plaintiff must prove in all cases that the publication has played a material and substantial part inducing others not to deal with him, and that as a result he has suffered special damages. (Id.)

Attorney Fees

Plaintiffs can only get fees “[i]f the court finds that a special motion to strike is frivolous or is solely intended to cause unnecessary delay”. Code of Civ. Proc., § 425.16(c).

A “prevailing defendant on a special motion to strike shall be entitled to recover his or her attorney’s fees and costs”. Code of Civ. Proc., § 425.16(c). However, a fee award is not required when the motion, though partially successful, was of no practical effect. Moran v. Endres (2006) 135 Cal.App.4th 952, 955–956; see also Mann v. Quality Old Time Service, Inc. (2006) 139 Cal.App.4th 328, 340 (“Where the results of the motion are ‘“minimal”’ or ‘insignificant’ a court does not abuse its discretion in finding the defendant was not a prevailing party”).