A recent court ruling could pave the way for a rash of lawsuits against companies whose sales reps malign their competitors.
The Arizona Court of Appeals has given the go ahead for a man who sells one water treatment system to sue Kinetico Quality Water Systems, which makes a different system. The judges said that disparaging statements by a Kinetico salesman about the product the first man was selling provide grounds to seek damages.
Attorney Ivan Kolesik who represents Kinetico said the ruling, unless overturned, will "open the floodgates’’ to litigation. He said it would give legal rights to virtually any employee of a company which had been defamed.
But appellate Judge Susan Ehrlich said such lawsuits should be permitted if the person filing suit can show some economic harm.
Kolesik, however, said financial impact is not a reason to allow such a lawsuit to proceed. By that logic, he said, a worker at General Motors could sue if someone’s statements resulted in fewer cars being sold and that affected the employee’s income.
The lawsuit was brought by Rodney Fillmore, who sold whole-house water treatment equipment made by H2O Concepts Systems.
Fillmore, who acted as his own attorney, said he had visited the Valley home of David and Angie Schmitt in early 2003.
Immediately thereafter, John Owen, a salesman for Kinetico, went to the Schmitt home to promote that system.
Fillmore charges that Owen made several disparaging statements, including that the H2O technology is "bogus, a fraud and does not work," and that its filtration unit is "nothing but a large carbon filter." Fillmore also said Owen told the couple that people at H2O Systems are "out and out crooks’’ and that the company had been "kicked out’’ of the Better Business Bureau due to "shady business practices.’’
Kolesik argued that Fillmore had no standing to sue on behalf of statements that were made not about him but about H2O Systems. But Ehrlich said Fillmore is suing over his own damages, not those of the company.
"He identified his commission from the potential sale to the Schmitts and his ‘humiliation’ as recoverable damages,’’ Ehrlich wrote for the court.
The appellate court also said Fillmore also could pursue a separate claim of defamation.
Ehrlich acknowledged that defamation claims generally must be about the plaintiff himself or herself. But she said there also is a legal concept of "group defamation.’’
The judge cited Owen’s alleged statement that people involved with H2O Systems were "crooks,’’ and that the couple had just met with Fillmore. That, Ehrlich said, left sufficient reason to believe that what Owen said involved Fillmore.