REPUTATION DAMAGE EMANATES FROM ACTIONS AS WELL AS WORDS

“It takes years to build a reputation but only minutes to have it destroyed.”

TASA ID: 2156

For someone who has served as an expert witness in approximately three dozen defamation cases, there is little question that negative communications disseminated in writing (libel) or verbally (slander) or both can be devastating to the image, reputation and/or good will of an individual, business, institution, public sector entity, or any other type of recipient targeted.  Defamation is normally defined as a false statement, published to a third party, that is damaging and is meant to harm and results from negligence, reckless disregard for the truth or malice. 

However, defamation is not the only way that a reputation can be damaged or harmed.  That can occur through various types of actions or inactions that – intentional or not – have negative consequences and have an equally disastrous effect by severely tarnishing how the person/entity impacted is perceived, regarded and/or judged by others.  In the communications business, there is adage that we hold to be unquestionably true in most cases: “Perception is more important than reality.”

I’ve also served as an expert witness in about a half dozen reputational harm cases – which resulted from both actions and inactions - and I believe that this type of lawsuit has barely had its surface scratched.  Some of those I’ve handled, I was initially approached on the basis of it being a defamation case which they clearly weren’t.  We converted them to a reputation harm case.  Following is a brief summary of some of these cases to serve as examples of how reputations can be destroyed by actions or inactions rather than words (e.g. defamation).

• Action – An honor student, star athlete and founder of three nonprofit social service organizations on campus at one of the nation’s most prestigious universities located in the South was accused of rape two weeks from graduation.  Police investigated, no evidence, thus no charges.  Because of his high profile and a recent edict from President Obama for colleges to protect women on campuses, the university decided to “send a message” and show compliance by expelling him after a bogus student hearing.  The negative results: national exposure in the media and on the internet as a rapist, no degree, loss of visa forcing him to leave the country and loss of lucrative position with investment firm on Wall Street.
   
• Inaction – Individual, who was a former employee of a government agency in Hawaii left to open a consulting firm.  Received three consulting contracts from that agency after he left.  A community activist went public (e.g. media, internet) with allegations of impropriety with the awarding of the contracts and the performance of the consultant.  Significant media coverage of allegations negative to consultant resulted.  Consultant was restricted from talking to the media or defending himself by a clause in the contract with the agency and the agency did nothing to refute/discredit the false accusations in the public domain.  The negative results: the consultant lost the contracts; his reputation was damaged and was forced to relocate to another state to get business.
   
• Action – An entertainment attraction in Southern California offers educational and historical presentations (e.g. Civil War, American Revolution, California Gold Rush) to acquaint people with American history.  For 17 years, a school district had been sending classes to the facility on field trips.  One of the business’ principles went on a couple personal social media sites and offered some comments on various social and political subjects unrelated to the business that were considered offensive.  Because of this, the School district cancelled all future field trips from its various schools.  Because of the high profile nature of the business and the school district’s actions, word spread.  The negative results:  loss of 30 to 50% of business and widespread negative and harmful exposure to its reputation throughout the surrounding area.
   
• Inaction – The owner of a very well respected chain of community newspapers in the Southeast put them up for sale.  The buyer had no background in journalism but bought the chain under the assurances of the seller that he would teach him the business and serve as a consultant after the sale.  He also offered to help grow the chain using his contacts.  After the sale, the seller reneged on the instruction and even started a rival newspaper.  Further he poached the chain’s advertisers by broadcasting throughout the region that the buyer had no experience (true) and thus couldn’t operate the chain.  The negative results: advertisers left, new newspaper cut into circulation, loss of business, and damage to chain’s reputation.
   
• Action – A company headquartered in the Midwest with a sterling reputation for a high quality dog food had its food manufactured by a supplier using its formula and ingredients provided.  The supplier also manufactured its own brand of dog food.  At some point, the food it produced for both companies began to contain a chemical that could harm animals.  The supplier came under investigation related to its own brand and did not disclose to the company it supplied that there was a problem.  When eventually that chemical was also discovered in its brand, it received negative nationwide exposure and had to recall the product.  The negative results:  Loss of reputation and good will for brand with public and in industry, cancellation of a couple types of products, several economic loss and loss of existing relationships with wholesalers, retailers and others with which it had business relationships.

The bottom line is this.  Unquestionably, the largest contributor to reputational harm emanating from outside sources is defamation.  However, the actions or inactions that are taken that negatively impact the perception of another can also be significant and often is equally damaging.  It would behoove attorneys to be mindful of this and have their antennas up to ferret out such opportunities for future litigation to serve the best interests of those who are victims of such types of reputational harm.

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This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

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