In the noncompete context, a common claim or defense is that ex-employers have badmouthed the former employee, causing them damages. But trying to put a value on those damages, or even establishing parameters, or a range, on those damages can be awfully tricky.

The General Rule for Defamation Cases

The general rule is that slander is not actionable unless the plaintiff suffers "special damage," meaning that they can establish the specific damages they suffered as a direct result of the defamatory statement, or statements, that were made about them by the defendant. See, e.g., Aronson v. Wiersma, 65 N.Y.2d 592, 594, 493 N.Y.S.2d 1006, 483 N.E.2d 1138; Matherson v. Marchello, 100 A.D.2d 233, 236, 473 N.Y.S.2d 998 [Titone, J.P.]; Restatement [Second] of Torts [Restatement] § 575).

The 4 Exceptions to the General Rule - Defamation Per Se

On the other hand, there are 4 exceptions to this general rule, instances where the plaintiff need not prove the specific damages they sustained on account of the defendant's actions, cases where the damages will be presumed as a matter of law:

The four established exceptions (collectively “slander per se”) consist of statements

(i) charging plaintiff with a serious crime;

(ii) that tend to injure another in his or her trade, business or profession;

(iii) that plaintiff has a loathsome disease; or

(iv) imputing unchastity to a woman

(See, Moore v. Francis, 121 N.Y. 199, 203, 23 N.E. 1127; Privitera v. Town of Phelps, 79 A.D.2d 1, 3, 435 N.Y.S.2d 402 [Simons, J.]; Civil Rights Law § 77; 2 Seelman, Libel and Slander in the State of New York, at 869–907 [1964]; Restatement §§ 570–573; Smolla, Defamation § 7.05). When statements fall within one of these categories, the law presumes that damages will result, and they need not be alleged or proven.

Liberman v. Gelstein, 80 N.Y.2d 429 (1992).

At the risk of stating the obvious, category #2 is the one most relevant in the noncompete context, i.e., where the former employer makes supposedly fact-based statements about the ex-employee that harms their ability to retain an existing job, or to secure further employment.

Why Establishing the Parameters for Defamation Per Se Claims is So Challenging

The Pattern Jury Instructions, which are the specific instructions the jury is given by the judge at the end of the case for how they are supposed to evaluate the damages to be awarded based on this claim, demonstrate on their face why it is so hard to reach a consensus on the proper value for one of these claims.

Don't take my word for it; here's the charge:

"If you decide that the plaintiff is entitled to recover, you will award an amount as, in the exercise of your good judgment and common sense, you decide is fair and just compensation for the injury to plaintiff’s reputation and the humiliation and mental anguish in (his, her) public and private life which you decide was caused by defendant’s statement. In fixing that amount you should consider the plaintiff’s standing in the community, the nature of defendant’s statement made about the plaintiff, the extent to which the statement was circulated, the tendency of the statement to injure a person such as the plaintiff, and all of the other facts and circumstances in the case. These damages cannot be proved with mathematical accuracy. Fair compensation may vary, ranging from one dollar, if you decide that there was no injury, to a substantial sum if you decide that the injury was substantial." (Emphasis supplied).

Jonathan Cooper
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Non-Compete, Trade Secret and School Negligence Lawyer