On December 3, 2022, Justice Masley of the New York County Commercial Division issued a decision in EarthLink, LLC v. Charter Communications Operating, LLC, 2022 NY Slip Op. 34097(U), holding that a false statement that a business is insolvent is defamation per se, explaining:
In the fifth cause of action, Earthlink alleges that CCO’s customer service representatives made disparaging and false statements about Earthlink’s business, including that Earthlink was going out of business. CCO argues that this claim should be dismissed because a charge of insolvency does not constitute defamation unless special damages are pied and Earthlink has failed to do so. Earthlink’s claim is for defamation per se, for which special damages need not be alleged.
Defamation is a false statement which can expose the plaintiff to public contempt, ridicule, aversion, or disgrace, or induce an evil opinion from contemporaries, and inhibit positive societal interaction. The elements of a defamation claim are: (1) a false statement, (2) published to a third party, (3) without privilege or authorization, and (4) that causes harm, unless the statement is one of the types of publications actionable regardless of harm. Statements that cause such harm include (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. Since only assertions of fact are capable of being proven false, a defamation claim therefore must be premised on published assertions of fact, rather than on assertions of opinion. A statement’s truth or substantial truth is an absolute defense. On a motion to dismiss, the court considers whether the statement is reasonably interpreted to be defamatory in the context of the entire publication. An employer is liable for defamation by an employee in the course of employment.Here, Earthlink alleges reports that CCO’s customer service representatives impugned the basic integrity of Earthlink by telling Earthlink subscribers that Earthlink wasn’t in business anymoreor had been taken over by CCO. Where a statement impugns the basic integrity or creditworthiness of a business, an action for defamation lies and injury is conclusively presumed. Statements are thus judged according to whether they affect the ability of a business to exist and prosper. In New York a charge of insolvency, bankruptcy or want of credit is actionable per se. In Academy, defendant allegedly stated that plaintiff was about to go under and defunct. There, the court found that the plaintiff had adequately alleged a defamatory statement because a jury might find those statements tantamount to a charge of insolvency or an absolute negation of plaintiff’s business existence. CCO’s alleged statements to subscribers that CCO took over Earthlink and that Earthlink wasn’t in business could be found by a jury to impugn Earthlink’s creditworthiness and negate its business existence. Therefore, Earthlink’s defamation claim is sufficiently pled.
(Internal quotations and citations omitted).