By Matthew King

If, as the saying goes, one bad apple can spoil a whole bunch, imagine what a widely disseminated news story about bad apples can do to an industry. In just such a case, the law governing trade disparagement claims left Washington’s apple growers feeling sour.

In the early 1990s, the CBS program “60 Minutes” aired a segment that said daminozide (commonly known as Alar) was being sprayed on apples to enhance their growth and appearance. The report indicated that Alar could cause cancer and that it could not be washed off the apples, nor could peeling the skin remove the risk.

As a result of the broadcast, people around the world boycotted apples, and the Washington growers suffered an estimated loss of $75 million. The growers responded with a product disparagement action against “60 Minutes” that ultimately was unsuccessful.1

Product disparagement is a form of injurious falsehood and is often analyzed under the rubric of defamation. Washington case law recognizes product disparagement as a distinct tort.2 To prevail in a product disparagement case, the plaintiff must show that the defendant published a knowingly false statement harmful to the interests of another and intended such publication to harm the plaintiff’s pecuniary interests.3

The Auvil court recognized that Washington courts are split on whether falsity must be shown by a preponderance of the evidence4 or by a clear and convincing standard.5 The split is likely due to the confusion between the distinct trade disparagement tort and the separate tort of defamation. The Restatement is silent on the burden of proof; however, it does adopt the various standards of proof depending on whether the plaintiff is a public or private figure.

Further, the plaintiff in an action for product disparagement must establish that the disparaging communication was personally directed to his or her product.6 Where a statement only disparages the quality of plaintiff’s goods, the statement is actionable if special damages are pleaded and proved. But if the defamatory words are spoken of a person, which in themselves prejudice him in his profession, trade, vocation or office, they are slanderous and actionable per se unless they are either true or privileged.7 When a statement is published in circumstances that violate both rules, an action may be brought for defamation as well as for disparagement.8

In addition, a trade libel claim must be supported by some evidence that the statement was “of and concerning” the plaintiff. In the apple growers’ case, the court found that the growers failed to prove that the statements were “of and concerning” the specific apple growers and that no malice existed when airing the report.

This problematic burden is further illustrated by the Oprah Winfrey mad cow dispute.9 Oprah Winfrey aired a story regarding the chances that the United States beef supply would be contaminated with mad cow disease. Texas beef producers sued her in Texas alleging that the statement was libelous to their product and was a violation of the Texas Food Libel Act. The court granted Winfrey’s motion for summary judgment on the trade disparagement claim on the grounds that the show did not identify the Texas producers individually and, therefore, was not “of and concerning” them. The court also found that the statements were not made with malice, but were made to inform the public and not, specifically, to harm the cattle ranchers.

Of interest, the court indicated that First Amendment considerations came into play, even though there was no governmental action. The court reasoned that the act was measured against the background of a profound national commitment to the principle that debate on public issues should be uninhibited, robust and wide open.10 The court also indicated that stories on such topics occupy the “highest rung of the hierarchy of First Amendment values” and are entitled to special protection.11

As shown by the Alar and Oprah cases, trade disparagement is a difficult claim to prevail upon, especially in the context of news reporting. So long as the statements are made (1) without malice and (2) without reference to a specific person or company, the claims will likely fail. n

1 See Auvil v. 60 Minutes, 800 F. Supp. 928 (E.D. Wash. 1992).

2 Waschter v. Carnation Co., 5 Wn. App. 121, 485 P.2d 1000 (1971).

3 Id., citing Restatement (Second) of Torts ¤ 623A.

4 Haueter v. Cowles Pub. Co., 61 Wn. App. 572, 811 P.2d 231 (1991).

5 Herron v. King Broadcasting Co., 112 Wn.2d 762, 776 P.2d 98 (1989).

6 See Rosenblatt v. Baer, 383 U.S 75, 81 (1966); Unelko Corp v. Rooney, 912 F.2d 1049, 1057 (9th Cir. 1990); Auvil, 800 F. Supp. at 933.

7 Spangler v. Glover, 50 Wn.2d 473, 478, 313 P.2d 354 (1957).

8 Waschter, 5 Wn. App. at 126.

9 Texas Beef Group v Winfrey, 11 F. Supp. 2d 858 (N.D. Tex. 1998), aff’d, Beef Group v Winfrey, 201 F.3d 680 (2000).

10 New York Times Co. v. Sullivan, 376 U.S. 254, 270, 84 S. Ct. 710, 11 L.Ed.2d 686 (1964).