Opinion ID: 345587
Heading Depth: 2
Heading Rank: 1

Heading: The New Jersey Law of Product Disparagement.

Text: 23 As a nation, we have evolved since the industrial revolution from a simple agrarian society into a highly industrialized country with dynamic and complex commercial interests. One would expect that such an evolution would be attended by comparable activity in commercial law, and specifically in the law of product disparagement. Surprisingly, this has not been the fact. The enormous growth in commercial and industrial activity has not had a similarly prolific effect on the number of product disparagement cases. This is reflected in the law of New Jersey and of this circuit. In fact, when this court had occasion to consider a product disparagement issue some years ago, we noted that the right of action for disparagement was not only slow in developing at common law, but that (t)he early cases took a Shakesperian view. Black & Yates v. Mahogany Assn., 129 F.2d 227, 229 (3d Cir. 1941), cert. denied, 317 U.S. 672, 63 S.Ct. 76, 87 L.Ed. 539 (1942). Thirty-five years later, dubious distinctions still survive between disparagement of products and defamation of corporations on the one hand and unfair competition on the other. Ancient strictures on the powers of a court of equity and false historical analogies to personal defamation have interfered with the logical development of the law. 8 Several courts 9 and many commentators 10 have attempted to rationalize and modernize the law. Instructive as these authorities may be, however, we are bound to review the district court's order under the principles of product disparagement as enunciated by the New Jersey courts. 24 We predicate our analysis of the New Jersey law of product disparagement on the two New Jersey cases dealing expressly with product disparagement, Klein v. Millside Farms, 8 N.J. 240, 84 A.2d 705 (1951); Henry V. Vaccaro Const. Co. v. A. J. DePace, Inc., 137 N.J.Super. 512, 349 A.2d 570 (1975), and the three New Jersey cases dealing with the closely related tort of slander of title, Andrew v. Deshler, 45 N.J.Law 167 (1883); Rogers Carl Corp. v. Moran, 103 N.J.Super. 163, 246 A.2d 750 (1968); Frega v. Northern New Jersey Mfg. Assn., 51 N.J.Super. 331, 143 A.2d 885 (1958). Our partial reliance on the slander of title cases is justified by the similarity between that tort and product disparagement: both impair the vendibility of the object the plaintiff is trying to sell, the former by impugning title to the object and the latter by casting aspersions on the quality of the object. The similarity is such that the rules of one are usually imported without restraint into cases involving the other. See, e. g., Restatement (Second) of Torts § 623A and note 1 at 6; § 624 and comment a at 18; § 626 and comment a at 27 (Tentative Draft No. 13, 1967). We therefore will assume that a New Jersey court adjudicating a case of product disparagement would be guided by New Jersey precedents in slander of title cases as well as product disparagement cases. 25 None of the New Jersey product disparagement or slander of title cases expressly delineates the elements of a cause of action for product disparagement or slander of title but the elements are implied in Andrew v. Deshler, supra. In that case, the trial court had granted a non-suit to the defendant in the action against him for slander of title on the ground that the plaintiff had not presented sufficient evidence of malice. The Court of Appeals and Errors found the trial court's views on malice to be erroneous but before reversing, the appellate court had to assure itself that there was no other ground on which the non-suit could be affirmed, that is, that the plaintiff's proof was not deficient in some other respect. In this context, the high court stated: 26 The plaintiff proved publication, the falsity of the most material and damaging allegation in the (communication complained of) . . . and special damage resulting from that part of the (communication) alleged to be mala fide. 27 45 N.J.Law at 172. 28 This statement, when combined with the court's pronouncement that in an action for slander of title, there must be evidence of malice, express or implied, id. at 169, suggests that New Jersey recognizes an action for slander of title or product disparagement consisting of four elements: (1) publication (2) with malice (3) of false allegations concerning plaintiff's property or product (4) causing special damages, i. e., pecuniary harm. The requirement of malice is affirmed by both Frega and Rogers Carl, supra, while the element of special damages has recently been underscored in Vaccaro, supra : The action requires special damages in all cases, unlike defamation. 349 A.2d at 573. 29 Thus defined, the New Jersey action for product disparagement is substantially identical to the cause of action for product disparagement described by the Restatement (Second) of Torts § 623A (Tentative Draft No. 13, 1967): 11 30 § 623A. Liability for Publication of Injurious Falsehood 31 (1) One who publishes an untrue statement of fact or opinion which he should recognize as likely to result in harm to interests of another having pecuniary value, through the action of third persons in reliance upon the statement, is subject to liability for pecuniary loss resulting to the other from such harm if, but only if, 32 (a) The publisher is motivated by ill will toward the other, or 33 (b) He intends to interfere with the interests of the other in a manner which he is not privileged to do, or 34 (c) He knows the matter to be otherwise than as stated, or that he has not the basis for knowledge or belief professed by his assertion. 35