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What is a reputation worth? In defamation cases, juries are tasked with answering this very question. In New Jersey, actual, punitive and presumed damages can be awarded to vindicate a person's reputation.

Actual damages, also known as compensatory damages, “are intended to compensate the plaintiff for the wrong done by the defamatory speech.” Nuwave Investment Corp. v. Hyman Beck & Co., 221 N.J. 495, 499 (2015). There are two types of actual damages, specific and general. Specific damages “compensate a plaintiff for specific economic or pecuniary loss.” Id. General damages are those “not capable of precise monetary calculation” and “can include harm caused by impairment to reputation and standing in the community, along with personal humiliation, mental anguish, and suffering to the extent that they flow from the reputational injury.” Id. (Internal quotation marks and citations omitted.) Importantly, “all compensatory damages, whether considered special or general, depend on showing of actual harm, demonstrated through competent evidence, and may not include a damage award presumed by the jury.” Id. 

In cases where no actual damages can be proven, the court can award presumed damages “to vindicate the dignitary and peace-of-mind interest in one's reputation that may be impaired through the misuse of the Internet.” W.J.A. v. D.A., 210 N.J. 229 (2012). However, in W.J.A., the New Jersey Supreme Court limited presumed damages to nominal damages (essentially a dollar). See id. at 249.

While punitive damages are also available to victims of defamatory speech, in order to obtain punitive damages, compensatory damages must be awarded. See e.g., M.D. v. J.M., 2016 WL 5173407 *6 (App. Div. Unpub. Sept. 22, 2016 (finding “[a]n award of nominal damages cannot support an award of punitive damages.”)  [The plaintiff's name has been changed to remove reference to the plaintiff's actual name. The plaintiff will be referred to herein as “M.D.”]

Limiting presumed damages to nominal damages burdens the victims of defamation speech who cannot prove actual damages. Websites and search engines, like Google, will typically honor orders to remove content deemed defamatory by a court. In order to obtain a court order for removal, in New Jersey, a plaintiff must file a complaint within one-year of the defamatory content being published. See N.J.S.A. 2A:14-3.

The one-year statute of limitation creates a catch-22 for victims of defamation. By the time that a plaintiff suffers provable damages from the defamatory content, the statute of limitation may have run. On the other hand, if a plaintiff timely files a complaint without actual damages, the plaintiff must proceed with an expectation of merely a nominal damage award. Under the status quo, victims of defamation are perversely incentivized to seek actual damages to ensure they can be awarded compensatory and possibly punitive relief.

In W.J.A., the court recognized how the internet can impact a reputation, stating:

In today's world, one's good name can too easily be harmed through publication of false and defaming statements on the internet. Indeed, for a private person defamed through the modern means of the internet, proof of compensatory damages respecting loss of reputation can be difficult if not well-nigh insurmountable. We question why New Jersey's longstanding common law tradition of presumed damages—for defamation claims by private citizens on matters that do not involve public concern—should be altered now to force an average citizen to ferret out proof of loss of reputation from any world-wide potential viewers of the defamatory internet transmission about that otherwise private person.

210 N.J. at 248.

As mentioned, presumed damages allow victims of defamatory speech a mechanism to obtain court orders necessary for the removal of defamatory content appearing online and elsewhere. However, for many who cannot prove actual damages, the cost associated with obtaining a court order makes filing a lawsuit cost-prohibitive. Consequently, targets of defamatory speech are often victimized twice, once by the poster of the content and again by a system that forces them to expend monies to remove content with no chance for recovery.

M.D. v. J.M., a New Jersey unpublished Appellate Division ruling, provides an excellent case in point. 2016 WL 5173407 (App. Div. Unpub. Sept. 22, 2016). In M.D., the plaintiff, a doctor, performed rhinoplasty on the defendant's nose. After a successful surgery, the patient later returned to the doctor after he reinjured his nose and attempted to correct it himself. Two years after the initial surgery, two defamatory comments about the doctor were posted to www.doctordecision.com and www.ripoffreport.com. In one post, the defendant wrote, “This guy will rob you, roll the dice with you [sic] life and leave you looking horrible. Nothing to gain but the satisfaction of saving others. Do a background check and see he's already been accused of lying and intentionally poisoning an entire town by the district attorney.”  Id. at *1.

After the defendant failed to answer the plaintiff's complaint, plaintiff moved and obtained a default judgment. At the proof hearing to determine damages, “plaintiff testified that, in his area of practice, a doctor's reputation is 'what it's all about' because patients 'have a lot of different options out there' for what are largely elective, cosmetic procedures.'” Id. at *2. However, the plaintiff could not quantify the loss of reputation with examples of lost business.

Ultimately, the judge awarded plaintiff $25,000 in “actual and presumed damages” and “$40,000 in punitive damages because 'defendant acted in wanton and willful disregard of another's rights.” Id. at *3. Defendant appealed the determination that he defamed the plaintiff and the award of damages. The Appellate Division found no basis to disturb the finding that defendant defamed the plaintiff but did vacate the damage award. In vacating the damages, the court affirmed that “if the trier of fact finds that a defendant has defamed the plaintiff, and there is no proof of actual damage, 'only nominal damages can be awarded' …. Presumed damages may not be awarded in any higher amount.” Id. at *5.

The doctor, in M.D., was “successful” in having the objectionable posts deemed defamatory. That being said, for all the expenses the plaintiff was forced to incur to defend his reputation and livelihood, the plaintiff was awarded mere nominal damages. Many plaintiffs simply do not have the resources to protect their reputations if there is no realistic hope for a monetary recovery.

New Jersey is in the minority of states in limiting presumed damages to nominal damages. See Susan E. Seager, Jackpot! Presumed Damages Gone Wild-And Unconstitutional, 31 WTR Comm. Law. 1, 30 (2015). In fact, only eight states, including New Jersey, have either eliminated or limited presumed damages. Nevertheless, the New Jersey Supreme Court's decision to limit presumed damages to nominal damages was guided by the concern over “unguided jury evaluations of presumed damages.”  W.J.A., 210 N.J. at 249. While the court's concern has its merits, plaintiffs should, at the least, not bear the burden of vindicating their good names while also bearing the cost to do so. In defamation cases where nominal damages are awarded, attorney fees and the expenses of litigation should be compensable to the plaintiff as actual damages.

In M.D., the plaintiff had “paid a company to try to alter the search results received when a patient searched for his name and practice.” M.D. at *2. However, the court noted that “[w]hile plaintiff testified he engaged a company to try to improve his internet search profile, he never provided any documentation demonstrating the costs he might have incurred in this endeavor.” Id. at *4. If the court in M.D. was inclined to consider expenses paid by the plaintiff to improve his search results as actual damages, attorney fees necessarily incurred to remove defamatory content should likewise be considered as actual damages.

It is unclear whether the courts are already empowered to award attorney fees to a prevailing plaintiff in defamation cases. Again, M.D. appears to indicate expenses to remove defamatory content would be compensable. On the other hand, if attorney fees were treated as actual damages in defamation cases, there would be no need for presumed damages.

To eliminate any confusion as to whether attorney fees can be awarded in defamation cases, the New Jersey legislature should pass legislation to definitively establish that attorney fees are compensable to successful plaintiffs as actual damages. Importantly, by considering attorney fees to be actual damages, successful plaintiffs, who would otherwise only be able to obtain nominal damages, would also be able to seek punitive relief.

New Jersey's Domestic Violence Statute provides a model for how the legislature could award legal fees in the context of defamation lawsuits. Under N.J.S.A. 2C:25-29(b)(4), at a hearing for a final restraining order, a judge may require “the defendant to pay to the victim monetary compensation for losses suffered as a direct result of the act of domestic violence.” According to the statute, compensation to a victim of domestic violence includes “reasonable attorney's fees [and] court costs.”

Attorney fees under the Domestic Violence statute does not provide for fee-shifting. Therefore, “a victim of domestic violence who files a complaint in good faith cannot be held accountable for a defendant's counsel fees, even if the complainant does not prevail. Where a domestic violence complaint is filed and pursued in bad faith—i.e., based on perjured or suborned testimony—a claim for fees may be made under the frivolous litigation statute (N.J.S.A. 2A:15-59.1) but not under the Act.” Wine v. Quezada, 379 N.J. Super. 287, 292 (App. Div. 2005). A similarly designed statute to protect victims of defamation could likewise protect victims while ensuring that plaintiffs who seek to enforce their reputation rights are not penalized for attempting to do so. Moreover, the frivolous litigation statute would continue to apply to defamation cases to protect against cases filed in bad faith.

Protecting one's reputation should not be worth a dollar. By awarding successful defamation plaintiffs their reasonable legal fees and court costs when only nominal damages would otherwise be available, the legislature can ensure that all victims of defamation have the resources to ensure their reputations can be protected when defamatory content about them is published.

 

Andrew P. Bolson is an attorney with Meyerson, Fox, Mancinelli & Conte, in Montvale. He is also the founder of the Privacy Initiative of New Jersey.