A Group's a Group, No Matter How Small: An Economic Analysis of Defamation

69 Pages Posted: 15 Jun 2013 Last revised: 20 May 2018

See all articles by Alan D. Miller

Alan D. Miller

Faculty of Law, Western University

Ronen Perry

University of Haifa - Faculty of Law

Date Written: March 20, 2013


Consider the following case (Jews for Jesus, Inc. v. Rapp, 997 So.2d 1098, 1101 (Fla. 2008)): A Jews-for-Jesus bulletin publishes a report, falsely implying that a Jewish woman became "a believer in the tenets, the actions, and the philosophy of Jews for Jesus." Does this publication constitute defamation? What makes a statement defamatory? Should defamatoriness be determined in accordance with the views of the general non-Jewish community, with those of the Jewish minority, or with a normative ethical commitment? Our Article aims to provide the answers.

Part I demonstrates that the definition of defamatoriness in common law jurisdictions is essentially empirical, and distinguishes between the two leading tests — the English test and the American test. Section A shows that English courts have embraced the general community test, whereby a statement is defamatory if considered so by the public at large. The traditional English test, which relies on empirical observations, at least de jure, consists of a normative constraint. A statement is defamatory if considered so by the general community, taking into account only the views of "right thinking" people. Section B shows that American courts have generally endorsed the sectorial test, whereby a statement is defamatory if considered so by a substantial and respectable minority. This test integrates two constraints. On the quantitative level, although a statement can be defamatory if it prejudices a person in the eyes of a minority, that minority must be substantial. A single individual or a very small group of persons with peculiar views will not suffice. On the qualitative level, a statement may be defamatory if considered so by a mere minority, provided that it is a "respectable" one. The court will reject the sectorial standard if it does not comply with the normative threshold. A third possible empirical test, whereby the defamatory potential of a statement may be tested within a small group (the small group test), has not been adopted in any jurisdiction, and will not be presented in Part I. However, Part II demonstrates that it is economically preferable to both the English and the American tests.

Part II conducts two separate economic analyses of the alternative empirical tests for defamation. In the first analysis, we use a theorem from the economic field of social choice to study the relationship between the view of the community and the views of the individuals who comprise the community. We show that if the former is derived from the latter, and the derivation satisfies several normatively desirable properties, then the derivation must be done according to the unanimity rule: A statement may be considered defamatory only when all individuals in the relevant community consider it so. Because this rule is implausible except in the case of the small group test, it suggests that both the English general community test and the American sectorial test lack a solid theoretical foundation. In the second analysis, we study the costs and benefits associated with the various tests. We show that the important costs involved are the chilling effect and the problem of strategic action, and that the American sectorial test may have constituted a reasonable tradeoff between these concerns. We then argue that the fault requirement introduced in Gertz v. Robert Welch, Inc. should apply to both the falsity and the defamatory nature of the statement. Under this interpretation, the fault requirement ameliorates the chilling effect. As a result, the American sectorial test is no longer optimal, and it would be preferable from the standpoint of economic efficiency to adopt the small group test in its place.

Keywords: Defamation, Freedom of Expression, First Amendment, Economic Analysis, Social Choice, Torts, Community Standards, Restatement

JEL Classification: K00, K13

Suggested Citation

Miller, Alan D. and Perry, Ronen, A Group's a Group, No Matter How Small: An Economic Analysis of Defamation (March 20, 2013). Washington and Lee Law Review, Vol. 70, pp. 2269-2336, 2013, Available at SSRN: https://ssrn.com/abstract=2277697

Alan D. Miller

Faculty of Law, Western University ( email )

1151 Richmond Street
London, Ontario N6A3K7

HOME PAGE: http://alandmiller.com

Ronen Perry (Contact Author)

University of Haifa - Faculty of Law ( email )

Mount Carmel
Haifa, 3498838

HOME PAGE: http://law.haifa.ac.il/index.php/en/faculty-rperry

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