Circumventing the Defamation and Disparagement Noose:

Reputation Management, Series #3

Read the previous articles in the series: Reputation Management

Background

It used to be the case that the subjectivism prevalent and permeating the art world allowed much leeway in statements and assertions made about a given work of art. Over the last 50 years this forbearance has been supplanted by litigation focusing on not only those involved in the art world in general, but particularly on those carrying a level of expertise. Curators, appraisers, authenticators, have been pilloried and brought to court because they have made the serious mistake of making that which might be considered a fake, forgery, inauthentic, or even fraud, a valid conclusion. They seem to have forgotten that unless they have demonstrated that what they say is unequivocally true some may argue that what they say is questionably false. Questionably false entails that the parties, entities, products, or services have the right in most cases to bring suit against the assertor that h/she has engaged in defamation or disparagement of a product. It makes no difference if the assertor meant no harm or had no intention to defame. One may argue that the problem has to do with a misunderstanding or lack of knowledge regarding the various identifiers of inauthentic art and how to develop assertions about such inauthentic objects.

Introduction

In some cases, calls of inauthentic art have no reprecussions. One may say under certain circumstances that X is a copy because a person copied it. Aside from copyright violations one may copy or reproduce a given work. Historically, this has been a student's right of passage to become an artist. The boundary however is crossed when the copy takes on the identifier of being and sold as from the hand of the artist. At this point, it becomes a fraud, forgery, fake, bogus, and a violation of law. At the same time it enters a no man's land of a work of questionable authenticity whereby teams of experts circumscribed by law or scholarship engage in a process of rendering a possible final determination. Until such time as this determination is made, any determination not rendered legally lends itself to additional litigation founded upon defamation violations. The proactive steps preventing being cast in the SLAPP(1) soup process of defamation litigation constitute the focus of this paper.

Defamation and Disparagement

In order for a statement to be considered defamatory or disparaging, it must be communicated to someone other than the plaintiff, it must be false, and it must tend to harm the plaintiff.(2) Product disparagement is a form of a falsehood which injures and is often analyzed under the rubric of defamation.(3) Quite simply defamation or product disparagement entails that A states or writes publicly that a specific product is defective, that the statement is false, and that the statement resulted in losses to the owner of the product. In point, defamation or product disparagement allows the entity being defamed or disparaged to bring suit against the entity responsible for the assertion. X states the painting A is a fraud fake or forgery and the owner of the painting armed with a certificate of authenticity COA yells defamation because the would be disparager made a statement contradictory or incorrect in light of the COA. The owner also claims injury or loss since the defamatory or disparaging remarks allegedly caused the loss in value of the painting. The interesting point about the assertion from A is that A did not realize that the assertions made constitute conditions to allow litigation to move forward. One may believe that except for a few instances, free speech is guaranteed by our constitution. SLAPP suits and the new era of political correctness have supplanted the few with the many.

Note here that defamation and disparagement cases are not simple, or clear cut and as such one should be mindful that such a lack of clarity present severe risks associated with statements which tend to malign individuals, products and organizations. Such risks are losses in both money and time associated with 40 months of litigation resulting from various legal processes involved in a defamation or disparagement suit.

A Composite Case Study

John a certified appraiser took on an assignment to investigate the authenticity of a work recently purchased by his client XYZ corporation. John examined the work and its documents including the certificate of authenticity, various provenance documents, artist signature, style, and subject matter. He found that the certificate of authenticity was signed by the seller, the provenance documents were copies, signature was not similar, style was different, and subject matter did not match the artist's oeuvre. He reported his findings that the work was inauthentic to his client with a note that the seller of the work committed fraud and is going to jail. The client took the seller to court to force the seller to return his monies and lost the case. Following the court case the appraiser was sued for defamation and product disparagement for stating that the seller and his company committed fraud and was going to jail. The court ruled in favor of the plaintiff in both cases. What went wrong for the appraiser?

Analysis of the Case

To begin with the appraiser failed to remember that appraisers do not authenticate. Appraisers provide opinions of value. While a seller's COA is worthless as a condition of authenticity it is not illegal for a seller to provide one nor is it a condition for fraud. Merely because provenance documents were copies does not mean they were fake. Artist's signatures change as a result of age, infirmity, and choice. Additionally, styles change, and as far as oeuvre is concerned catalogues Raisonnés do not provide each and every work of an artist since works may be available but unrecorded. The appraiser really did not have solid evidence to support his claim of fake. Lacking support, the appraiser made a public statement that was false (note here that the owner of the work had documents supporting his claim of authenticity) and therefore satisfying two conditions of disparagement. Defamation and disparagement cases automatically assume that there is a loss to the plaintiff. Stating that the seller committed a crime or fraud, might be a simple utterance but keep in mind that fraud is a criminal act asserted by a public agency having appropriate jurisdiction. Citizens whether certified or non-certified in fraud examination do not have the right or legal backing to call forth assertions of fraud. Further, the stating of any tertiary assertions such as he is going to jail for what he has done may create an actionable defamation and disparagement case against the person making such statements. How does one escape the noose of defamation and disparagement?

Some Possible Steps to Prevent the Defamation/Disparagement Noose(4)

1. Before you open your mouth or put pen to paper think about the 40 month rule.(5) Is what you are about to assert worth the risk of spending 40 months in litigation?
2. If you are going to make a statement about a person or product which is negative do not be specific.
3. Back up your statements with evidence.
4. Even if you have evidence of wrong doing does the evidence create a falsehood?
5. Is the assertion malicious? Some courts look at the extent of malicious to reach a judgment.
6. Use modifiers such as could, possibly, may, likely, or alleged to frame your assertions.
7. Fraud statements should not be couched in defintive terms such as John committed fraud. Remember that fraud is an identifier best served by a public agent or agency.
8. Be aware that different jurisdictions have different laws. There is no one size fits all.
9. Secure errors and omission or personal liability insurance as an extra layer of protection for the unexpected suit.

Comment

We live in a time where there is a continual barrage of fraud news regarding those entities too big to fail. We are led to believe that this time we have the laws and policing forces to protect us from those who practice fraud daily. The fact is those who are supposedly protecting us do nothing. As far as fraud is concerned one might easily argue that the laws exist to allow the fraudsters to continue sacking the population rather than preventing the sacking. The ultimate fact or universal principle is probably that those too big to fail are too big to be controlled by any government agency.

Disclaimer: The above article is no substitute for any legal advice or advice from licensed or certified individuals. Questions and advice should be addressed to these individuals.

1. Strategic Litigation Against Public Participation pertains to a lawsuit filed to prevent those criticizing an entity from continuing their criticism.
2. http://lawandpractice.wordpress.com/2010/09/12/defamation-in-employment-investigations-bahr-v-boise-cascade-corporation-and-o%E2%80%99donnell-v-city-of-buffalo/
3. http://smalllawfirm.blogspot.com/
4. Windam, J.(2010) How CFEs can avoid the potential defamation pitfalls. Retrieved on October 5,2010 from http://www.fraud-magazine.com/article.aspx?id=4294967887
5. Daab, J. (2009). Strategic Litigation Against Public Participation, Fine Art Registry, March. SLAPP suits on the average run about 40 months before completion.

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— by John Daab Ph.D.  |  October 23, 2010

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