In case you missed it, actress Rebel Wilson won her defamation case against Bauer Media, publishers of Woman's Day, over articles calling her a serial liar.

Today, she was awarded $4.56M, which is massive for a defamation case. The first $3.9M was for economic loss; that's the part about lost work etc. Rebel's a big star, so it's not surprising that the economic loss number was high.

Then there was another $650k awarded in general damages, the purpose of which is to provide consolation for hurt feelings, damage to her reputation, and vindication. This is the number that should be worrying publishers.

The reason they should be worried is that there is a statutory cap on defamation damages for non-economic loss of around $380k, and the judge held that it didn't apply in this case. The legislation says that the cap may not apply if the circumstances justify an award of aggravated damages as well.

Things get a bit technical at this point, but stick with us.

Bauer said the effect of the cap rules was that the amount in excess of the cap could only reflect the aggravated damages award. The cap still applied for the general, non-economic loss award. Wilson said that if there was any aggravated damages award, then the whole cap goes out the window and the judge can award any sum appropriate for non-economic loss. The judge agreed with Wilson.

What does that mean for publishers, practically? If the publisher misbehaves to the extent that aggravated damages are justified, then there is no limit on the amount of general damages that can be awarded.

In this case, the judge said Bauer misbehaved quite a lot. It knew its source had an axe to grind with Wilson, and it didn't try to verify the facts or seek a reply from Wilson. Then at trial it repeatedly alleged that any defamation was trivial.

The judge said that $650k was justified because it had to be a big enough sum to vindicate Wilson and respond to the 'grapevine effect' where the articles were picked up and the untruths spread far and wide. The extent of the grapevine effect in this case was unprecedented according to the judge, and a big part of reason for the $650k award.

Publishers, don't assume that the damages cap is impenetrable. Adjust your risk analyses accordingly. If this holds up on appeal, the floodgates are open.

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