The Alabama Supreme Court today upheld a ruling in favor of a Baldwin County car dealer who was ethnically slandered by a competitor in Pensacola, leading to “conservative” losses of $7.1 million in sales, according to an economist who testified at the original, four-day trial in 2011. There, after three hours of deliberation, a Mobile County jury awarded Shawn Esfahani, the owner of Eastern Shore Toyota, $2.5 million in compensatory damages and $5 million in punitive damages.

According to the complaint, the charges were rooted in slanderous statements made by employees of Bob Tyler Toyota in Florida, where salespeople would routinely perpetuate a rumor that Esfahani, an Iranian-born American, funneled proceeds from his competing business to terrorist organizations in the Middle East. Among the defendants, Esfahani’s business was often referred to as “Middle Eastern Shore Toyota” or “Taliban Toyota.”

After the initial award, both Bob Tyler Toyota and a co-defendant, new car sales manager Fred Keener appealed, claiming errors in the evidence and procedure as well as excessive damages. But the Mobile Circuit Court denied the appeal and the Alabama Supreme Court affirmed, noting that Esfahani fled Iran as a teenager under political persecution and the accusations of links to terrorism in the post 9/11 United States were especially inflammatory.

CLICK TO READ THE SUPREME COURT’S OPINION

“We noted, as does the trial court here, that based upon the applicable presumption, the jury’s award was not assumed to be based solely on the plaintiff’s testimony aimed at establishing resulting mental anguish,” the Supreme Court’s opinion reads. “We then recounted the plaintiff’s evidence concerning the suffering allegedly experienced and concluded that, even had the entire award been intended as recompense for the plaintiff’s mental anguish, the award was ‘sufficiently grounded’ in the evidence to be sustained…We need not engage in any discussion of society’s attitude toward and opinion of terrorists and terrorist activity and how allegations of such activity may have impacted Esfahani.”

David McDonald, an attorney for Esfahani, called the opinion a “remarkable affirmation” and said it may be the biggest slander verdict in the history of Alabama.

“You often hear stories about the Alabama Supreme Court slashing verdicts, so what is remarkable to me is they appear to have recognized the unconscionable conduct perpetrated by the defendants in this case,” he said, noting it also reflects a “high regard” for the circuit court.

Esfahani opened Eastern Shore Toyota in 2007 and quickly developed a heated competition with Bob Tyler Toyota for local sales, according to the evidence. Esfahani also won a 2010 complaint in federal court against Bob Tyler Toyota for online advertising practices.

Slander is loosely defined as an oral untruth that can damage the reputation of the subject. Damages can be limited to actual damages or include punitive damages, if there is malicious intent.