The publication of a false statement that harms a business may addressed in litigation through tort claims other than common law defamation. In the realm of business torts, false statements about the goods or services of a commercial enterprise are sometimes referred to as “trade defamation” or “trade libel.” Many states use the term “injurious falsehood” to encompass the common law claim of trade libel as well as “slander of title.” E.g. Model Utah Civil Jury Instructions, CV 1901. Minnesota law uses a slightly different term – “malicious injury” – to describe the tort known elsewhere as “injurious falsehood.” This tort remains somewhat obscure in Minnesota jurisprudence, however, although its use in modern litigation may be increasing.
Marudas v. Odegard
The Minnesota Supreme Court recognized the tort of “malicious injury” in 1943. Marudas v. Odegard, 215 Minn. 357, 10 N.W.2d 233 (Minn. 1943). Marudas involved two automobile dealers in Milaca, Minnesota. The Odegard Motor Company printed an ad in the newspaper that stated, “To All Owners of General Motors Cars in our Territory: The service department of the Chevrolet Garage being closed and the Pontiac shop soon to follow, we have made arrangements with General Motors to be supplied with genuine G.M. parts that we may service for your car for the duration.” Because of World War II, rationing regulations, conversion to war production, and a labor shortage, many businesses were closed or partially closed. The Maduras Brothers Chevrolet & Implement Company sued for libel and malicious injury claiming that the newspaper ad was intentionally intended to suggest it was insolvent, which was not true. The Minnesota Supreme Court held that the ad was not technically defamatory. It went on, however, to hold that the proper cause of action was not for defamation but for “malicious wrong or malicious injury.” That Court held that malicious injury applies to statements falling outside the technical bounds of defamation that are (1) false; (2) made with malicious intent; (3) calculated to injure a business; and that (4) cause injury.
The claim of malicious injury has been little used in Minnesota since 1943 but may be seeing a resurgence. See, e.g. Keckhafer v. Prudential Ins. Co. of Am., No. CIV.01-1017 RHK/AJB, 2002 WL 31185866, at *5 (D. Minn. Oct. 1, 2002) (holding “where a plaintiff alleges that a defendant maliciously intended to injure him or her by communicating false words and has succeeded in that malicious intent, and damage to the plaintiff is the direct result of the defendant’s untrue words, a claim exists under Minnesota law upon which relief can be granted.”) and Management Registry, Inc. v. A.W. Companies, Inc., et al, No. 017-cv-05009 JRT/KMM, 2019 WL 7838280, at *7 (D. Minn. Sept. 12, 2019) (adopted January 30, 2020) (denying motion to dismiss malicious injury claim, finding the claim “specifically assert[ed] that each of the defendants took steps to intentionally harm [plaintiff]’s business by making false statements to [plaintiff]’s employees and customers”).
Key Differences Between Defamation and Malicious Injury
There are important differences between defamation and malicious injury. A claimant in a malicious injury claim is not required to prove damages to its “reputation” and the false statement does not need to have a defamatory meaning. For a malicious injury claim, the claimant must show that the statement was false, that it was made with intent to cause economic harm, and that it did cause actual economic damages or financial loss. A plaintiff in a defamation claim, by contrast need not show malice or intent (unless the plaintiff is a public figure) and need not show “actual” damages but may seek generalized damages for injury to reputation. It has been said that, “injurious falsehood is a far more difficult cause of action than defamation to sustain, because it is an action only for special damages caused by the false statement, and the burden of proving falsity, damages, and ‘malice’ in its many forms is higher than in defamation.” Sack on Defamation, § 13:14[A].
The Minnesota Deceptive Trade Practices Act
It should be noted that business conflicts in Minnesota involving passing off of goods as those of another, false statements about goods or services, disparagement of goods or services of another, false statements as to the quality or price of goods, and other conduct that causes a likelihood of confusion or misunderstanding in the course of business are often litigated under the Minnesota Deceptive Trade Practices Act, Minn. Stat § 325D.44 (“MDTPA”), which was enacted in 1973. This may explain why the tort of malicious injury has been uncommon. The MDTPA, however, only allows for injunctive relief and attorneys’ fees. That makes the MDTPA a powerful tool where financial loss may be difficult to establish. But many situations may allow for the assertion of both a statutory claim under the MDTPA and a common law claim of malicious injury. Malicious injury may also serve as a predicate for a tortious interference claim.
Commercial litigators and businesses in Minnesota should be aware of the claim of malicious injury and understand the differences between this business tort and the common law cause of action for defamation. If your business has been injured by false statements by another, or if your business has been sued for malicious injury, defamation, unfair competition or deceptive trade practices, contact the business litigation attorneys at Trepanier MacGillis Battina.
About the Author:
V. John Ella is a Minnesota commercial litigation and business torts attorney. He can be reached at 612.455.6237 or by e-mail at firstname.lastname@example.org. Trepanier MacGillis Battina P.A. is a Minnesota business and employment law firm located in Minneapolis, Minnesota.