Defamation: is your reputation protected by the constitution?

If the government publicizes false information about you or your business, do you have any recourse under the constitution? Is it defamation?

The theory boils down to this: because a false or defamatory comment can harm the good name and reputation of a business (especially when uttered by the government), there must be some measure of due process. Otherwise, the harm would constitute a taking (of your reputation) without notice or hearing as required by the Fourteenth Amendment.

In Martin Marietta Materials v. Kansas Dept. of Transportation, the Tenth Circuit recently addressed a claim for reputational harm by a government contractor that provided construction materials. In that case, the KDOT publically stated that Martin’s materials were poor or failed to meet standards. Martin disputed this claim and filed suit claiming the comments hurt its business.

In rejecting Martin’s reputation claim, the Tenth Circuit recognized that to prevail, Martin must show more than damage to its reputation; it must also show “stigma-plus,” a standard that required Martin to demonstrate both (1) governmental defamation and (2) an alteration in legal status.

The Tenth Circuit rejected Martin’s claim on both grounds.

First, the Court held that Martin failed to identify any defamatory statement. As the Court recognized, for a statement to be defamatory, it must be false in fact. Here, the Court concluded that KDOT’s statements that Martin’s materials had failed its testing were accurate. Thus, those statements could not serve as a vehicle for a defamation claim.

Second, the Court held that Martin could not satisfy the “stigma plus” prong because it suffered no tangible property loss. A mere inability to obtain future contracts with a public entity is not enough because Martin did not show that the statements precluded its ability to transact business with private vendors.

Perhaps more problematic for Martin is the fact that the decision to litigate the claim resulted in a published opinion, which necessarily elevates discussion of KDOT’s conclusions, which may do more harm to Martin’s bottom line in the long run.

If you have questions about liberty interest claims, or claims regarding defamation, contact the injury attorneys at Bryan & Terrill Law, 918-935-2777.