SUPREME COURT AFFIRMS AVAILABILITY OF REPUTATIONAL DAMAGES FOR CORPORATION, BUT TIGHTENS REQUIREMENTS FOR PROOF OF SUCH DAMAGES

Waste Management of Texas, Inc. v. Texas Disposal Systems Landfill, Inc.
Supreme Court of Texas, No. 12-0522 (May 9, 2014)
Justice Willett (Opinion)
Two waste management companies competed to obtain landfill-services contracts with Austin and San Antonio. One, Waste Management, hit below the belt, publishing libelous claims about Texas Disposal and its landfill. A jury awarded Texas Disposal $450,000 for expenses incurred as a result of the defamation, $5,000,000 for reputational damages, and $20,000,000 in exemplary damages, an amount the trial court reduced by applying the statutory cap. After the Court of Appeals affirmed, the Supreme Court affirmed in part and reversed in part, finding: (1) corporations (and other entities) can suffer and recover for reputational damages as individuals can; but (2) such reputational damages are “non-economic” damages for purposes of the statutory cap on exemplaries; and (3) given the free-speech and therefore constitutional dimension of such claims, there must be legally sufficient evidence to support both the existence and the amount of reputational damages, at least as to a public-figure plaintiff like Texas Landfill. “‘[J]uries cannot simply pick a number and put it in the blank’[;] instead the amount must [only] fairly and reasonably compensate the plaintiff for his injury” and “not be a disguised disapproval of the defendant.” Here, the Supreme Court held it could not discern from the evidence “that the amount awarded by the jury any more fairly and reasonably compensates [Texas Landfill] for its injury to reputation than it appears to be disapproval of [Waste Management’s] conduct.” So, the Court reversed the award of reputational damages, having found no legally sufficient evidence to support it; it then remanded for a reevaluation of the amount of exemplary damages.

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