Defamation claim dismissed over proof of reputational damage

IOWA–The state Supreme Court in late October dismissed a lawyer’s defamation claim against The Ottumwa Courier over an incorrect report that the lawyer had declared bankruptcy, because he failed to prove any damage to his reputation had occurred.

The court noted that in Iowa, the purpose of defamation laws has been to compensate individuals whose reputations have been harmed. Consequently, the court held that Iowa will continue to require individuals who bring defamation actions to prove that their reputations have been damaged, despite U.S. Supreme Court holdings that arguably might allow the imposition of damages for mere emotional harm.

The state Supreme Court maintained that allowing plaintiffs to recover damages without proof of reputational harm would foster monetary awards that far exceed those needed to compensate actual injury. The court stated that it would continue to require this proof because “to do otherwise would set the law of defamation on end.”

In 1993, the Courier incorrectly reported that Ottumwa attorney Richard Schlegel had declared bankruptcy. The report appeared in the courthouse records section of the newspaper. Schlegel was, in fact, representing a debtor in a bankruptcy proceeding, but had not declared bankruptcy himself.

Schlegel subsequently brought a defamation action in state court in Ottumwa and alleged that the mistaken report had caused him humiliation and had damaged his reputation. Schlegel’s wife asserted a loss of consortium claim. The jury awarded Schlegel $230,000 and his wife $150,000 in compensatory damages and then tacked on a $2 million punitive award after determining that the paper had acted with “willful and wanton disregard for the rights of another.”

After establishing that Schlegel had to prove harm to his reputation, the state Supreme Court concluded that he had failed to do so, and further concluded that the only proper remedy was to dismiss his claim, rather than grant a new trial.

Schlegel had presented evidence that he was a well-known attorney in the community and that a number of his friends read the report, but he failed to prove that he had any distinct reputation, whether good or bad, or that anyone in the community “thought ill of him” because of the report, the court stated. (Schlegel v. The Ottumwa Courier; Media Counsel: Kasey W. Kincaid, Terri L. Combs, Des Moines)