Business Owners' Reputations: How Notoriety Can Make Owners (and Their Businesses) Prey to Defamation

Effectively marketing a business and maintaining its reputation and goodwill within the community is exceptionally important to the success of a business, but it is a full-time effort as well. For better or worse, a business's image and reputation are often closely tied to the image and reputation of its owner or owners. This can be a great opportunity for owners to get involved in the community and indirectly improve the reputation of the business. However, as a business owner puts him or herself in the public eye and attention is drawn, it becomes increasingly likely that someone will spread a harmful and false story that can damage both owner and business. Worse yet, as notoriety increases, owners may also have less recourse to defamation law to seek compensation and public validation that the harmful stories are untrue.

Under numerous U.S. Supreme Court decisions, First Amendment free speech protection is given to speech regarding public officials and public figures unless the speech is defamatory and made with actual malice. A statement is made with actual malice if the speaker/publisher made the statement with knowledge that it was false or with reckless disregard for the truth or falsity of what was said.[1] This is a very high bar to satisfy, and plaintiffs frequently run into problems of finding evidence to support this requirement. A public figure, then, may be harmed by a scathing and untrue publication yet have no legal recourse if the publisher or speaker exercised at least some care in making the statement.

The question for business owners then becomes, how much public involvement and notoriety is required before he or she becomes a public official or public figure? Public officials are, generally speaking, elected officials and other government employees of interest to the public.[2] The law defines public figures much more broadly. There are two types of public figures: general public figures and limited purpose public figures. A general public figure is someone who has inserted themselves into the public sphere and is of such interest to the general public that all aspects of their life and business are of public interest.[3] Examples of these individuals can include figures like Elon Musk, Jeff Bezos, or Mike Lindell ("the MyPillow guy"). A limited public figure, on the other hand, is someone who places him or herself into a public issue or controversy. Courts make this classification largely upon whether the individual intentionally involved themselves and has taken a place of prominence in a pre-existing controversy.[4] This would include someone who gets involved in a specific government policy issue, leads a publicly active non-profit organization, or organizes a boycott, march, or similar movement. If the defamatory statement is related to the public controversy that the limited public figure has inserted themselves into, then the high standard of actual malice applies.

This is not to say that business owners should not pursue public involvement and build their community notoriety. Such attention can be extremely valuable. However, as a business owner becomes more publicly involved, rising in notoriety to a limited public figure, public figure, or public official, the likelihood of someone spreading a harmful defamatory publication increases, as does the difficulty in bringing a successful defamation suit.

[1] New York Times Co. v. Sullivan, 376 U.S. 254, 280 (1964).

[2] Rosenblatt v. Baer, 383 U.S. 75, 86 (1966).

[3] Gertz v. Robert Welch, 418 U.S. 323, 351 (1974).

[4] Foretich v. Capital Cities/ABC, 37 F.3d 1541, 1553 (4^th Cir. 1994).