## Facts

- During a 1981 drought in Milltown, New Jersey, municipal water restrictions and perceived taste/odor problems increased consumer demand for bottled water.
- Dairy Stores, Inc., operating Krauszer’s Food Stores, sold bottled water labeled “Covered Bridge Crystal Clear Spring Water,” and sales sharply increased during the drought.
- A reporter for Sentinel Publishing Co.’s weekly newspapers investigated drought-related water issues and the bottled-water business.
- The reporter bought a bottle of Krauszer’s “Covered Bridge” water and retained Paterson Clinical Laboratory, Inc. to test it.
- The laboratory reported the presence of chlorine; the laboratory director stated the water “most likely did not come from springs” because of that presence.
- Sentinel published an article stating that a tested sample of “Covered Bridge Crystal Clear Spring Water” sold at Krauszer’s did not contain pure spring water, based on a laboratory analysis obtained by the newspapers.
- Krauszer’s refused to disclose the water’s source and did not provide its own contrary test results when asked.
- Dairy Stores sued Sentinel, the reporter, and the laboratory for corporate defamation and product disparagement, and asserted negligence and interference-with-prospective-economic-advantage claims against the laboratory.

## Issues

1. What liability standard governs claims by a corporation for allegedly defamatory and product-disparaging statements published in commentary on a matter of public concern?
2. Does the common-law privilege of fair comment (and related First Amendment protections) require proof of “actual malice” to recover against media defendants and an independent laboratory involved in news gathering?

## Decision

- The New Jersey Supreme Court affirmed summary judgment for all defendants.
- The court held the publication addressed a matter of legitimate public interest (drinking-water purity and related consumer concerns during a drought).
- The court applied the common-law privilege of fair comment and required Dairy Stores to prove actual malice—knowledge of falsity or reckless disregard for truth.
- The court found no evidence creating a triable issue that the newspaper, reporter, or laboratory acted with actual malice.
- The court extended the same protection to the non-media laboratory because its testing and related statements were integral to the news-gathering and reporting process.

## Legal Principles

- Fair comment protects commentary, opinions, and inferences on matters of public interest when based on disclosed or assumed facts, absent actual malice.
- In corporate defamation and product disparagement suits arising from public-interest commentary about a product, the plaintiff must prove actual malice; negligence is insufficient.
- A court may apply the actual-malice requirement in this context without labeling the corporate plaintiff a public figure for all purposes.
- Non-media participants whose work is integral to investigative reporting on matters of public concern (e.g., independent laboratories providing test results for publication) receive the same actual-malice protection to avoid chilling public-interest reporting.

## Conclusion

Because the challenged statements concerned a public issue and were protected by fair comment, Dairy Stores could recover only by showing actual malice; lacking evidence that defendants knew the statements were false or acted with reckless disregard, summary judgment for the newspaper, reporter, and testing laboratory was affirmed.


Dairy Stores, Inc. v. Sentinel Publ’g Co., 516 A.2d 220 (N.J. 1986)