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Opinion: Keep to the American Rule: No Attorney Fees as Actual Damages in Defamation Cases

February 26, 2019 | Posted in : Articles, Fee Shifting, Legislation / Politics, Prevailing Party Issues

A recent New Jersey Law Journal editorial, “Keep to the American Rule: No Attorney Fees as Actual Damages in Defamation Cases,” reports on the fee-shifting in defamation actions.  The editorial reads:

In an article which appeared in the Jan. 14, 2019, edition of this Law Journal, New Jersey attorney Andrew B. Bolson discussed the subject of damage awards in defamation actions.  It was pointed out that under New Jersey law, a jury can award either specific damages or general damages.  The former are intended to compensate the successful plaintiff for a specific pecuniary loss.  General damages, however, are those which are not susceptible to precise calculation.  Mr. Bolson points out that under the Supreme Court’s decision in Nuwave Investment Corp. v. Hyman Beck & Co., 221 N.J. 495, 499 (2015), “all compensatory damages, whether considered special or general, depend on showing of actual harm, demonstrated through competent evidence, and may not include a damage award presumed by the jury.”

It is also noted that where a plaintiff is unable to show actual damages, a jury does have the authority to award presumed damages (generally limited to $1.00) in order to offer some solace to the plaintiff whose reputation has been damaged.  Mr. Bolson says that New Jersey is in a minority of states that limit presumed damages to nominal damages.  He urges that, “To eliminate any confusion as to whether attorney fees can be awarded in defamation cases, the New Jersey legislature should pass legislation to definitively establish that attorney fees are compensable to successful plaintiffs as actual damages.”  Mr. Bolson contends that protecting one’s reputation should not be worth just a dollar.  He urges that successful plaintiffs should be able to receive legal fees and costs even where only nominal damages are awarded.

Although the internet has revolutionized publishing and made it far easier to broadcast malicious lies about anyone, the fact is that to adopt Mr. Bolson’s suggestion would be to drastically change our American system whereby, except for specified statutory or contractual exceptions, litigants bear their own legal costs.  Whether that established system is ever to be changed remains to be seen.  However, to provide in defamation actions that, even in the absence of actual harm, a prevailing plaintiff may receive attorney fees as “actual damages” would be to distort the meaning of such damages and, in effect, adopt the British system where the loser pays.  While we respect Mr. Bolson’s contention that one’s reputation should be compensable, irrespective of demonstrated harm, we are not yet prepared to endorse such change in our American system.