Opinion ID: 372626
Heading Depth: 2
Heading Rank: 2

Heading: Trade Disparagement

Text: 12 We also find that the liability for trade disparagement was not necessarily based on willful conduct. The district court found that in Gudger v. Manton, 21 Cal.2d 537, 541, 134 P.2d 217, 220 (1943), California had adopted the definition of Restatement of Torts § 624 (1938) for trade disparagement. This definition contains the classic language of negligence, concluded the district court, and thus it permits liability for non-willful conduct. 13 However, Gudger and § 624 involved slander of title, the questioning of another's Title to property, not trade disparagement (or trade libel, as it is more commonly known in California), which is the disparagement of the Quality of another's property. In California these two torts are considered distinct. 4 B. Witkin, Summary of California Law § 327, at 2593 (1974). 14 We find only two California cases that discuss the elements of trade libel at all. In Shores v. Chip Steak Co., 130 Cal.App.2d 627, 630, 279 P.2d 595, 597 (1955), it was said, The distinction between libel and trade libel is that the former concerns the person or reputation of plaintiff and the latter relates to his goods. This suggests that reckless disregard or even negligence would suffice for trade disparagement liability just as with libel. 15 The definition of trade libel was addressed more directly in Erlich v. Etner, 224 Cal.App.2d 69, 73, 36 Cal.Rptr. 256, 258 (1964): Trade libel is defined as an intentional disparagement of the quality of property, which results in pecuniary damage to plaintiff. (Rest. Torts §§ 626 and 627.) Accord, 4 B. Witkin, Summary of California Law § 330, at 2596 (1974). Restatement of Torts § 626 (1938) defines trade libel thusly: 16 One who without a privilege to do so publishes an untrue statement of fact which is disparaging to the quality of another's land, chattels or intangible things, under circumstances which would lead a reasonable man to foresee that the conduct of a third person as purchaser or lessee thereof would be determined thereby, is liable for pecuniary loss . . . . 17 Section 626, Comment i, reads, As to the publisher's knowledge of the untruth of the disparaging statement and the impropriety of his purpose in publishing it, see § 628 and Comments B and C on § 625. Those provisions, in turn, make clear that to be liable a speaker need not know, believe, or have reason to believe that his statement is false, and a speaker is not protected even if he has reason to believe his statement is true. If the facts show (1) that the statement is in fact false, and (2) that the speaker knows or has reason to know that a third person will rely on it, liability without fault follows. 18 In light of the citation to § 626 and its strict-liability provisions, and in light of the suggestion in Shores that trade disparagement cases are governed by the same principles regarding knowledge of falsity that govern libel cases, we do not believe that the Erlich court meant that liability for trade disparagement could be imposed only where the speaker had actual knowledge that his statement was false. We do not believe that California courts then (or now) would have refused to find trade disparagement where the speaker disparaged with reckless disregard of whether his statement was true or false. Even Restatement (Second) of Torts §§ 623A and 626 (1977), which adopts a scienter standard, would allow liability in a reckless disregard case. 19 Therefore, a bare judgment for trade disparagement cannot meet the standard for willfulness.