Is it commercial disparagement when one business confuses other business customers on how to schedule appointments?

Question

CGLI policies have following trigger for advertising injury:

d. Oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;

These policies usually do not clearly define what exactly "disparages" means. So I started to search around and came across HARTFORD CASUALTY INSURANCE COMPANY v SWIFT DISTRIBUTION, INC, where California court defines disparagement as:

We hold that a claim of disparagement requires a plaintiff to show a false or misleading statement that (1) specifically refers to the plaintiff‘s product or business and (2) clearly derogates that product or business.

So in a hypothetical scenario where plaintiff/claimant is accusing defendant/insured of misleading plaintiff's customers that appointments from now on must be scheduled with defendant (and not plaintiff's general manager) - would that qualify as disparagement?

DEFENDANT'S AGENT began to tell customers assigned to him for services at PLAINTIFF that in the future, the customer should call DEFENDANT'S AGENT directly on his personal cell phone so that DEFENDANT'S AGENT could ensure that future appointments of PLAINTIFF'S clients would be handled by DEFENDANT'S AGENT and bypass PLAINTIFF'S GENERAL MANAGER responsible for scheduling appointments. In addition to controlling the appointments that would be serviced by DEFENDANT'S AGENT, DEFENDANT'S AGENT also solicited and instructed PLAINTIFF'S customers to instead go to DEFENDANT's location where DEFENDANT could deny all profits to PLAINTIFF.

It seems that there is a falsehood as defendant is confusing plaintiff's customers on how to schedule appointments from now on (disparagement of business title?). And it detracted customers from plaintiff's business.

Court ruling for similar case would be appreciated.

Answer 1

misleading plaintiff's customers that appointments from now on must be scheduled with defendant (and not plaintiff's general manager) - would that qualify as disparagement?

Only if the legal definition is taken literally, since the legal definition of "disparagement" is too broad and ambiguous. Thus, the legal theory(-ies) at issue should be made more specific in a complaint. Case law, though, appears to use the term "disparagement" only in reference to harmful falsehoods.

Black's Law Dictionary (4th edition) defines disparagement as "A statement about a competitor's goods which is untrue or misleading and is made to influence or tends to influence the public not to buy". It is noteworthy that a misleading statement is not necessarily amenable to a test of truth or falsity, thereby rendering the legal definition overly broad.

For instance, defendant's statement to the customers "Plaintiff has ordered/authorized that you should contact me directly instead of him" is a statement of fact which can be either proved or disproved. By contrast, defendant's direction to the customers "From now on, don't contact the plaintiff but approach me directly" clearly is not a statement of fact. In the latter case, the defendant's instruction fits the legal definition of disparagement insofar as the instruction misleads customers on how to proceed. Notice that in that context, the defendant's direction in and of itself does not impair plaintiff's reputation (except maybe in particular scenarios).

On the other hand, you might have noticed in Hartford v Swift the remark that "disparagement concerns damage to the reputation of products, goods, or services" (emphasis added). The court in Hartford thereby reflects that the notion of disparagement relates to attacks to reputation, which is not palpable in the narrative excerpt you posted regarding the defendant.

In that excerpt, the conduct or acts attributed to the defendant could be actionable under legal theories such as unfair competition, breach of contract, tortious interference with contract/relationship, or a combination thereof. The pertinence of each theory will depend on the particularities of the case.