Corporations & the Right to Sue for Libel

Back in February, just after the US Supreme Court issued its Citizens United decision that essentially asserted that corporations have a right to mostly-free speech in the political realm, there was a lot of speculation about what other rights would be asserted next on behalf of corporations.

In that regard, here’s an interesting story from the UK about the legal right of corporations to sue for libel. Writing in The Guardian, lawyer David Allen Green asks, Why should companies be allowed to sue for libel? The whole piece is very much worth reading, but here’s Green’s conclusion:

Given the range of other legal means open to companies to protect their commercial reputations, I think the right of companies to sue for libel should be severely limited, if not abolished altogether. The public interest requires nothing less.

Green suggests that those who assert the cogency of such a right likely do so on the basis of the idea that corporations are, after all, persons:

But to the conventionally minded English lawyer there is no question that companies should be able to sue for libel. After all, companies are “legal persons” – and in English law, personality goes a very long way. The view is that if “natural persons” can sue for libel then so can companies.

But it doesn’t seem to me at all obvious that personhood is the foundational notion, at least not ethically. What about something simpler, like the idea that the corporation is a valued instrument (of its owners, members, shareholders, whatever). If you libel a company (by publishing something false that damages its reputation) you do economic damage to its shareholders. But rather than having each shareholder launch a lawsuit against whomever wrote or broadcast the libelous words, it makes more sense to let the company itself sue.

Now, Green argues that companies have other effective mechanisms at their disposal, beyond libel law. And that may well be. My only point here is to argue that we don’t absolutely need to begin with the notion that a corporation is a person, in order to attribute to it certain legal rights. All we need to do is recognize that protection of the corporation is important to protecting the interests of those flesh-and-blood persons whose economic interests depend upon it.

(p.s., in the wake of Citizens United, I did a trio of blog entries on the topic. See my 1st, 2nd, and 3rd entries. A few months earlier, I had written about Why Corporations Must Be Legal Persons.)

4 comments so far

  1. […] protections against attacks. Some people, for example, think companies should not even be able to sue for slander or libel. Likewise, corporations (and other organizations) do not enjoy the same regulatory protections and […]

  2. […] before that corporations need to be considered persons. And I’ve also blogged about whether corporations should have the right to sue for libel to protect their interests. But a brand isn’t the same as a corporation, so the arguments […]

  3. AK on

    OK, agree with your conclusion that curtailing rights on a blanket basis would be overkill. All the consequences of curtailing rights can’t be foreseen without reference to a specific situation, so this feels right.

    Now, consider a case where corporation A which fully owns company B (A trading as B) sues a person C for libel, for allegedly tarnishing the reputation of company B. Halfway through the litigation, A transfers B to another company and now owns zero percent of B. Does A continue to have the right to carry on libel action in the name of B ? Do ethics and law have the same view on this ? Hope to have your view !

    • Chris MacDonald on

      Interesting question. I’m not a lawyer, so I can’t give you a definitive answer to the legal part. But I assume it would turn on whether A has some continuing financial interest, or whether its interests have already been harmed such that a libel suit would seek to correct a past wrong.

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