“Taliban Toyota” Slander Verdict: $2.5 Million in Compensatory Damages, $5 Million in Punitives

From the Press-Register (Alabama):

A jury awarded $7.5 million in damages to the Iranian-born owner of Eastern Shore Toyota on Monday evening after his competitor called his business “Taliban Toyota” and accused him of being a terrorist.

Shawn Esfahani, owner of the mega-dealership on Interstate 10, sued Bob Tyler Toyota in Pensacola and its sales manager for slander…. Esfahani fled from Iran in 1980, when he was 16, after the Islamic revolution…. He became a U.S. citizen and opened Eastern Shore Toyota in December 2007 after years of working in car sales….

According to the lawsuit, … [a Tyler Toyota manager told one pair of customers] that Esfahani was “from the Middle East, and he is helping fund the insurgents there and is also laundering money for them,” the lawsuit says.

Another salesman told customers that “I can’t believe you are buying from that terrorist. He is from Iraq, and he is funneling money back to his family and other terrorists. I have a brother over there and what you’re doing is helping kill my brother,” according to the lawsuit.

The story is in the news because of its particular fact pattern, but the legal issue is quite simple: Falsely accusing someone of being a terrorist, or a funder of terrorists, without any basis for believing this, is slander (or libel, depending on the medium use), and can lead to damages. It’s possible that the damages award will be reduced by the court, or by an appellate court, depending on how much strong plaintiff’s evidence was of actual and likely lost business. But the underlying finding of liability thus seems quite right to me, assuming the facts about what was said by Tyler salespeople are as the jury found them to be.

Thanks to Opher Banarie for the pointer.

UPDATE: A lawyer involved in the case, who turns out to be a Conspiracy reader, gives his perspective on the facts. (Naturally, I’d be glad to offer similar perspectives from other lawyers who were involved.)

Evidence was presented of lost sales attributable to the defamation via an expert witness, an economist with a Ph. D. in economics from Stanford U., unrebutted by an opposing expert though defense counsel did an admirable job in cross-examination. The jury chose to award significantly less than what the plaintiff proved as lost sales, i.e., sales that would have been made but for the defendants’ actions.

As the Professor pointed out above from the Ebbole case (involving allegations that a tattoo parlor owner had AIDS), damages to reputation and for mental anguish are presumed in a case involving slander per se. Mental anguish obviously only applied to the owner. The jury awarded $1,250,000 in compensatory and $2,000,000 in punitives to the owner and $1,250,000 in compensatory and $3,000,000 to the dealership.
There is no breakdown in the verdict form on what portion of the compensatory damages is attributable to mental anguish (for the owner) or loss of reputation (both) or lost sales (dealership). The owner had only a per se claim. The dealership had both per se and slander per quod claims. The latter claim is only sustainable upon a showing of special (or actual monetary) damages.

Also, this case did not involve only a few random events though only 3 customers came forward to testify. The statements in the news accounts are only a small sample because the media only picked up allegations in the complaint which was filed nearly 2 years ago. The media were not there to hear testimony presented of statements such as “Taliban Toyota,” “Middle Eastern Shore Toyota,” “Little Iraq,” “you’re helping kill American soldiers if you buy a car from there because the dealer sends money to fund terrorist organizations who are killing American soldiers,” “you might want to think about buying a car there because the owner is Iranian and he sends money back to his family who are terrorists,” and one salesman even harassed a customer (a Lutheran pastor who testified at trial) calling him on the phone and yelling at him about how the Pastor’s buying a car at the dealership meant the Pastor was helping kill the salesman’s brother who was fighting in Afghanistan. All of this, of course and undisputedly, was FALSE.

Nor did the media hear the testimony of a former employee AND a current employee of the defendant dealership showing that these statements were prevalent, used in every sales meetings, the sales manager encouraged salesmen to use this pitch to make sales. Or from the sales manager defendant who admitted making such statements (after having denied such statements in previous sworn testimony).

Also not reported is that, before filing suit in July 2009, the plaintiff sent a letter to the defendant dealership demanding that the statements stop and that a retraction be made for the statements made to the Lutheran pastor and his wife. No retraction was made and the statements continued. The plaintiffs finally filed suit in January 2010. In April 2010, another customer came forward saying that the same types of statements had just been made to her.

In any event, the law is that damages are presumed to flow from slander that is per se (imputes an indictable offense involving infamy or moral turpitude). Terrorism, the funding of terrorism and the funding of foreign terrorist organizations are all federal criminal offenses as is treason. One of the theories behind the presumption of damages is that it is nearly impossible to show which customers did not shop at or make a purchase from a company because of the statements that are slanderous per se.