Proving Damages in a Commercial Disparagement Case

When false negative information about a company, its employees or its products and services is spread, it can quickly damage the company’s goodwill and reputation. This is known as commercial disparagement and it can provide the injured company with grounds for legal action and potential compensation. However, in such cases, damages are not automatically presumed. The plaintiff must provide evidence of monetary losses or other harm to the company.

There are various types of losses and harm from commercial disparagement that can be demonstrated, including the following:

• Lost Revenue — If the false statements result in an immediate and substantial decrease in sales, this will be reflected in the company’s periodic financial reports. Additionally, lost future revenue can be shown through the company’s sales projections. Although predicting future revenue can be challenging, well-reasoned and credible sales projections can serve as persuasive evidence.
• Lost Profits — While revenue and profits are interconnected, not all sales yield the same profit margins. Disparaging statements might cause a small decline in revenue but a significant drop in net profits. Both recent profit reports and future profit analyses can be utilized in calculating damages.
• Lost Shareholder Value — Disparaging statements can negatively impact the value of a company’s shares, especially if the stock is publicly traded. Poor financial performance can quickly influence stock prices in the short term. Additionally, such losses can erode public confidence in maintaining or increasing shareholder value, affecting current and future stock prices.
• Damage Control Expenses — Companies often need to spend substantial amounts of money to counteract false claims and address commercial disparagement. This can include costs for advertising, public relations efforts and legal fees. These expenses may be recoverable in the lawsuit.

Proving these damages can be complicated and frequently necessitates the use of expert witnesses. Valuing a company’s worth and future prospects is inherently subjective and may be contested by the defendant’s experts. An experienced commercial disparagement attorney can evaluate your situation and recommend the most effective strategy for proving your case.

Law Offices of Donald W. Hudspeth P.C. takes a practical approach to litigating commercial disparagement cases. To schedule a consultation, call our Phoenix firm today at 866-696-2033 or contact us online.