Legal Question in Business Law in California

No one is a party until a lawsuit has been filed. If the business and the owner both file the lawsuit then they will both be parties. What matters is whether both of them should sue.

If the defamatory statement is about the owner individually, then the owner should be the only plaintiff. By definition, if a statement was defamatory it must have been read or heard by someone else. It sounds like the business and its employees would be the someone else in this instance. That might make them important witnesses, but it is no reason to make them parties.

Note, though, that defamation law is more complicated than most people realize. The email might not have been defamatory even if it seems that way to a layperson. If it was defamatory, it might have defamed someone else too. And the person who sent it may have valid defenses.

The owner of the business should consult with a lawyer in order to better understand his rights.

Your question may have two answers; one that fits in general, and one that would apply to the circumstances in a defamation lawsuit.

In general, a business and its owner are separate legal parties IF the business is a corporation or an LLC. These are entities separate and distinct from the owner, or if there are more than one, the owners. The same is true under modern law with respect to a partnership. They are now considered separate legal entities, i.e., "parties" distinct from the partners therein. The exception is that a sole proprietor is not a separate party from his (or her) business. The proprietorship business is just something he/she does, like eating dinner or playing golf.

Now, in order to have a viable defamation case, whether libel or slander, a defamatory statement or other communication about the victim must be communicated by the defendant to a third party. Then, let's say I am the sole stockholder of a corporation, and you send an e-mail to my corporation telling it that I am a crook (and I'm not), and I am the only one who reads it, then, even though the corporation and I are separate parties, there is no defamation, because only I can read the e-mail, The corporation can't read. Therefore, the defamatory statement hasn't been communicated to a third party.

Let's add another wrinkle. Suppose my secretary reads the e-mail, sent to the corporation, and defaming me. Aha! Now we have communication of a defamatory statement, and that's actionable. However, your question doesn't raise the possibility that someone other than the owner has read the e-mail.

Finally, let's change the facts and suppose the e-mail is sent to the corporation, but it defames the corporation, rather than the owner, and the owner reads it. Can the corporation sue? Good question, but I think the answer is yes. Will it be worthwhile? Probably not, because the corporation won't be able to plead and prove that it suffered any damage, since the owner presumably already knows all the (true) bad stuff about his business already and the corporation isn't adversely impacted.

Mr. Hoffman is correct that defamation law is complicated; so complicated in fact that he seems not to have understood your question at all. Your question seems to be aimed at the requirement that in order for a communication to be defamatory it must be made to a "third party." Hence your question as to whether the owner is a "third party" from the business. The answer, as is so often true in law, is "it depends." However, the real answer is that it is almost certainly irrelevant. Another element of defamation is that it must cause damages. Conveying a defamatory statement to the owner of a business is almost certainly not going to cause any recoverable damages, regardless of whether the owner is a separate party from the business or not. I suppose theoretically if there were multiple owners and a false communication of fact regarding the business was conveyed to one owner who then took action harmful to the company and the company was an LLC or corporation with independent legal existence, you could have a defamation by communication to an owner. Other than that, and certainly if there is only one owner, you can't have defamation by communication to a business owner about his business because there can be no damage to the reputation of the business that causes economic harm.

If the business was defamed, it is the business, and not the owner, that can validly bring a claim for trade libel.

It seems like you are looking at what is known as "publication." Publication means communication to a third party about the person being defamed. As long as you have communicated to a third person about someone else, that constitutes publication, and may support an action for defamation, such as slander or libel.