## Facts

- Authors Jack Lait and Lee Mortimer published *U.S.A. Confidential*, which included statements about a Dallas department store and its employees.
- The store’s corporate owner alleged the publication harmed its business reputation by implying it knowingly employed immoral staff and traded on that reputation.
- Three employee groups sued for libel based on statements referring to them as groups rather than by name:
  - Nine fashion models, alleged to be the entire group of such models employed by the store.
  - Men’s sales staff (about 25 total; 15 named plaintiffs), described as predominantly homosexual (e.g., “most” were “fairies”).
  - Women’s sales staff (about 382 total; 30 named plaintiffs), described as “call girls,” implying prostitution.
- Defendants moved to dismiss for failure to state a claim and sought to strike portions of the pleadings.
- Related rulings in the same litigation addressed whether the employee claims could proceed in a representative (class-like) form under then-existing Rule 23 and whether group size defeated “of and concerning” identification.

## Issues

1. Whether the publication stated an actionable defamation claim by the corporate plaintiff based on alleged injury to its business reputation.
2. Whether defamatory statements aimed at employee groups were “of and concerning” individual members when the publication did not name them.
3. Whether group size and the breadth of the accusation barred claims by individual members (especially for the large saleswomen group).
4. Whether the employee claims could proceed on a representative basis under then-Rule 23’s “spurious” class action mechanism.

## Decision

- The court denied dismissal of the corporation’s libel claim, holding the pleaded statements could reasonably be understood to defame the business in its trade or reputation.
- The court allowed the nine models’ claims to proceed because the allegedly defamed group was small, determinate, and readily identifiable, permitting an inference that each member was targeted.
- The court declined to dismiss the salesmen’s individual claims at the pleading stage because the group was relatively small and the allegation that “most” were implicated could be understood as referring to identifiable members.
- The court dismissed the saleswomen’s claims because the group was too large for a reasonable reader to understand the statements as referring to any particular individual absent special identifying circumstances.
- The court rejected or sharply limited attempts to litigate the employee claims in a representative capacity, directing that any viable defamation claims proceed, if at all, as individual actions.

## Legal Principles

- Defamation requires that the challenged statement be “of and concerning” the plaintiff; group-directed accusations are actionable by individuals only when readers could reasonably identify the plaintiff as a target.
- A defamatory statement about a small, well-defined, and ascertainable group may support individual claims by members because the statement can be understood as applying to each member.
- A defamatory statement about a very large group generally does not support individual claims because it lacks sufficient identifiability as to any particular member, absent additional facts tying the statement to the individual.
- A business entity may sue for defamation when a publication tends to injure it in its trade by attacking its business practices, integrity, or the character of its workforce in a way that reflects on the business itself.
- Defamation claims are ordinarily individualized and ill-suited to representative treatment where liability and injury turn on person-by-person identification and reputational harm.

## Conclusion

The court treated the case as a problem of identifiability in group defamation: the corporation’s claim and claims by small, identifiable employee groups could proceed, but claims by members of a very large group failed because the publication could not reasonably be read as referring to any particular individual, and representative litigation was largely disallowed.


Neiman-Marcus Co. v. Lait, 107 F. Supp. 96 (S.D.N.Y. 1952)