The Texas Supreme Court has ruled that a Creedmoor, Texas-based waste disposal company was defamed by one of its competitors, but it significantly reduced the monetary damages the company will receive as a result of the decision.
Texas Disposal Systems Landfill Inc. initially sued Houston-based Waste Management Inc. in 1997, accusing the company of anonymously distributing false information about its landfill facility's environmental sustainability in order to gain an advantage in a bidding war the two companies were waging for waste removal contracts in Austin, Texas, and San Antonio, according to court documents.
A Travis County, Texas, district court jury eventually found in Texas Disposal Systems' favor, awarding the company $20 million in punitive damages and $5 million in damages for the harm done to the company's reputation, as well as nearly $451,000 in remedial expenses.
District Judge Stephen Yelenosky later ruled that the damages awarded for reputation harm did not qualify as economic damages, thus lowering the punitive damages to $1.65 million according Texas state law. A three-judge panel of the state's 3rd Court of Appeals upheld Judge Yelenosky's ruling in 2012.
On Friday, the state's highest court ruled unanimously that the nature of Waste Management's conduct does entitle Texas Disposal Systems to punitive damages and reimbursement of the money it spent combating the false information Waste Management circulated.
“It is well settled that corporations, like people, have reputations and may recover for harm inflicted on them,” Justice Don Willett wrote in the court's opinion. “If false or disparaging statements injure a corporation's reputation, it can sue for defamation per se just like flesh-and-blood individuals.”
However, the Supreme Court reversed the lower courts' $5 million compensatory damages award for reputational harm, finding that Texas Disposal Systems did not present sufficient evidence to support the financial value of the damage done to its reputation. As a result, the case will now revert back to the 3rd Court of Appeals for a recalculation — and likely reduction — of the exemplary damages.
A copy of the Supreme Court's ruling is available here.