Steve Straehle
May 12, 2014


Editor’s note: Murray Rothbard made the point that people and therefore companies do not own their reputations. A “reputation” is neither a physical entity nor is it something contained within a person. A “reputation,” Rothbard argued, is purely a function of the subjective attitudes and beliefs of other people and cannot be considered property. We cannot, of course, expect the state or, for that matter, Mitt Romney to uphold the rights of the individual.

Score one for Mitt Romney. The Texas Supreme Court has ruled that corporations, as well as individuals, may sue for damage to reputation. In 2011, Romney said that “Corporations are people” because “Everything corporations earn ultimately goes to people.”

In 1997, Texas Disposal Systems was competing with Waste Management of Texas for trash-hauling contracts in Austin and San Antonio. At one point, Waste Management issued an “alert,” which was distributed to Austin community leaders, calling into question the environmental safety of Texas Disposal’s landfill.

Texas Disposal sued Waste Management. The original trial court found Waste Management’s statements to be false, but awarded no damages. On appeal, it was ruled that the trial court should have considered defamation in the jury charge. A second trial jury found for Texas Disposal and awarded $5 million for injury to reputation and $20 million in punitive damages, which were later reduced to $1.65 million.

An initial appeal upheld the verdict and the case went to the Texas Supreme Court. That court ruled Friday that Texas Disposal is entitled to punitive damages because the jury found actual malice and because it provided sufficient evidence of actual damages. The court did throw out $5 million of the award, which will probably lead to a downward recalculation of the punitive damages.

Waste Management is still on the hook for $451,000 to reimburse Texas Disposal’s costs in countering the charges made in the memo, written by Austin public relations consultant Don Martin.

“Under these facts, Martin and WMT knew of the falsity of the Alert,” Justice Don Willett wrote for the court. “Both knew that claiming that TDS’s landfill had received an exception to EPA rules was false. Both knew that the language in the Alert was not simply inaccurate or made in error; instead, both parties knew it to be incorrect and specifically drafted the language to prevent TDS from obtaining the….contract.”

Willett went on to write “it is well settled that corporations, like people, have reputations and may recover for harm inflicted on them.”

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