This week’s article was written by my Litigation Department associate, Charles F. Holmgren, Esq.
Defendant BackTrack Reports, Inc.’s business is to produce background research reports pertaining to the financial industry that provide its clients information on potential investment opportunities. In one such report, a report it drafted on Plaintiff NuWave Investment Corp., BackTrack published statements from Hyman Beck & Co. and its employees that NuWave’s principals considered defamatory. NuWave filed suit against several defendants for defamation. At trial, with only BackTrack remaining as a defendant, the jury found BackTrack liable for NuWave’s damages and awarded NuWave both “presumed damages” and “actual damages.” BackTrack appealed the verdict on several grounds including the trial judge’s instructions on presumed and actual damages awards.
Damages in defamation cases fall into three categories: actual, punitive and nominal. Actual damages, otherwise known as compensatory damages, are intended to compensate the plaintiff for the wrong done by the defamatory speech. These may include harm such as damage to one’s reputation and his standing in the community. Actual damages must be based on evidence of actual harm and cannot include damages ‘presumed’ by the jury. Nominal damages, on the other hand, include those that may be presumed by the jury and serve the purpose of vindicating the character of a plaintiff who has not or cannot prove a compensable loss and are not appropriate when a jury has made a finding of any actual harm.
Here, the Supreme Court in its opinion NuWave Investment Corp. v. Hyman Beck & Co., 114 A.3d 738 (N.J. 2015), found, the trial judge incorrectly instructed the jury that presumed damages could be awarded to compensate NuWave for harm done by the BackTrack to their reputation. Harm done to one’s reputation can only fall under actual damages which NuWave must establish through evidence. By permitting a jury to presume harm to the NuWave’s reputation, the Court held, enabled the jury to exercise undue discretion in awarding damages that may not have reflected the evidentiary proof the NuWave submitted.
