While I concur with part I of the majority opinion, I disagree with the reasoning and conclusions in part II. The primary issue in part II is whether special damages, as defined in Civil Code1 section 48a, subdivision (4)(b), includes loss of income from O’Hara’s inability to work as a result of illness, depression or emotional distress caused by defamation. The majority concludes it does. I disagree and would reverse for the reasons set forth below.
Prior to the taking of evidence, the trial court ruled that it would allow testimony of O’Hara’s emotional state and depression “. . . for the purpose of showing the plaintiff’s inability to work.” The court further clarified its position during trial when it stated, “. . . if they found a potential employer that says, ‘Look, I wanted to hire this lady but I couldn’t because of her disability,’ that then proves special damages.”
Numerous witnesses testified regarding O’Hara’s inability to work. Dr. Koshkarian testified O’Hara had acute symptoms of anxiety and depression coupled with a lack of self-confidence. Cravens testified she initially found O’Hara shaking and hiding behind a chair. She stated she was in a depressed *1120state and could not seem to function outside of the home. Maloney offered her a job and when she failed to report he contacted her. She seemed distraught and very depressed. She told him she was not in an emotional state which would allow her to accept the job offer. McDaniel testified that when he interviewed her for a job she had a shake, appeared emaciated, something was wrong with her mentally, and she had lost her self-confidence. For these reasons he did not hire her. Wood testified he offered her a job but was unable to contact her. O’Hara stated that as a result of the slander she became extremely depressed and was unable to face the public. O’Hara’s evidence established she was unable to work because of the emotional and physical problems caused by the slander.
At the conclusion of the evidence, the trial court instructed the jury that “. . . any evidence of hurt feelings, depression, and emotional distress, was admitted only insofar as such evidence showed or tended to show, plaintiff was limited in her ability to work or was rendered incapable of working.” Thus, the jury was told that in determining damages it could consider all of the evidence regarding her emotional state for the purpose of deciding if this was the reason she was unable to work.
The majority concludes this instruction was proper since “special damages” as defined in section 48a includes damages for loss of income resulting from emotional distress. This conclusion is contrary to traditional defamation law and is inconsistent with the Restatement Second of Torts. Further, while several states have adopted similar retraction statutes,2 no case has extended special damages to cover loss of income resulting from emotional distress.
The law of defamation was developed to protect one’s reputation. To recover damages plaintiff should first be required to establish injury to reputation through either presumption or proof. (Prosser & Keeton, Torts, (5th ed. 1984) § 116A, p. 844.)
The California retraction statutes eliminate general and exemplary damages when a plaintiff fails to demand a retraction. (Pridonoff v. Balokovich (1951) 36 Cal.2d 788, 791 [228 P.2d 6].) While these statutes severely limit the damages available to a plaintiff, they have been upheld as constitutional and are designed to prevent excessive damages and further the public interest in the free dissemination of news. (Werner v. Southern Cal. etc. Newspapers (1950) 35 Cal.2d 121, 126 [216 P.2d 825, 13 A.L.R.2d 252].)3 *1121In his dissent in Werner, Justice Carter noted, “It is a rare situation where a plaintiff can trace and prove the special damage he has suffered from libelous matter printed in a newspaper or spoken over the radio about him. This does not mean that he may not have suffered sharply—but it does mean that he may never hear of business opportunities which would have been his had the ‘libelous stain’not appeared on his name plate.” (Id. at p. 142, italics added.) Special damages are damages which a plaintiff suffers to his property, business, trade, profession or occupation caused by this “libelous stain” or injury to his reputation, not damages resulting from the plaintiff’s emotional state.
Texts on defamation indicate special damages must flow directly from the injury to reputation and not from the effects of defamation such as illness. (Sack, Libel, Slander, and Related Problems (1980) § VII.2.2., pp. 345-346.) Mental distress, even if it results in physical illness, is not sufficient to justify an award of special damages. (Smolla, Law of Defamation (4th ed. 1991) § 9.07, pp. 9-15.)
The Restatement Second of Torts section 575, comments b and c, discusses special damages and states in part:
“b. Special harm. Special harm, as the words are used in this Chapter, is the loss of something having economic or pecuniary value. . . .
“Special harm must result from the conduct of a person other than the defamer or the one defamed and must be legally caused by the defamation. It is, however, immaterial whether the harmful action is taken because the person who takes it believes the defamation, or because he is unwilling to deal or to associate with one whose reputation has been impaired by it. Loss of reputation alone is not enough to make the defamer liable under the rule stated in this Section unless it is reflected in some kind of economic or pecuniary loss. So too, lowered social standing and its purely social consequences are not sufficient. Thus the fact that a slander has caused the person defamed to lose caste in the eyes of his friends and so has deprived him of many pleasant social contacts is not special harm. If, however, the loss of reputation results in material loss capable of being measured in money, the fact that the lowered social standing resulting from the slander itself causes the acts that produce the loss does not prevent the tangible loss from being special harm.
*1122“c. Emotional distress. Under the traditional rule, the emotional distress caused to the plaintiff by his knowledge that he has been defamed is not special harm; and this is true although the distress results in a serious illness. . . .” (Italics added.)
Allowing special damages for emotional distress is contrary to the position taken by the Restatement. The Restatement follows the traditional rule that the special damage must flow from the loss of reputation, not emotional harm. Under the Restatement, the loss of income must result from a third party’s knowledge of the defamation.
The traditional rule is followed in other states. In Terwilliger v. Wands (1858) 17 N.Y. 54, cited by the majority, the farmer who was slandered became distressed, melancholy, sick and pale. He was unable to work his fields and suffered a loss of income. The court found that his loss of income was the result of his own emotional distress and did not constitute special damages. Similarly, in Danias v. Fakis (Del. Super. Ct. 1969) 261 A.2d 529, plaintiff could not prove special damages for loss of wages when she stayed home and did not go to work for three days as a result of her embarrassment caused by the defamation. In Lind v. O’Reilly (Colo.Ct.App. 1981) 636 P.2d 1319 plaintiff could not establish special damages by proving that because of emotional distress he made less than his usual profit from his investment decisions.
Nor should it make a difference that a third party observed the illness resulting from the emotional distress and decided not to hire the person defamed. Otherwise, some astute plaintiff’s lawyer would have been able to take the farmer in Terwilliger out for a job interview in his distraught state and collect damages if he failed to obtain a job.
The majority notes that Gomes v. Fried (1982) 136 Cal.App.3d 924 [186 Cal.Rptr. 605] impliedly indicates lost time out of work attributable to the defamation constitutes special damages. Gomes is of little assistance since there was no lost income and the court never examined the issue of whether the loss of income must result from another person’s knowledge of the defamation or could flow from emotional distress or illness.
To be consistent with the traditional rules, section 48a, subdivision 4(b) must be interpreted to allow as special damages for loss of income only those losses caused by a third party’s conduct resulting from the third party’s knowledge of the defamation. There is no evidence to suggest that when the Legislature adopted section 48a or modified it by changing from “actual” to “special” damages in 1945 it intended to expand the traditional rule. Section *112348a is a limitation, not an expansion, of the rules providing damages to a defamed party. While one can sympathize with O’Hara, under the present state of the law, without a demand for retraction, she is not entitled to damages resulting from her inability to work caused by her emotional problems irrespective of whether these emotional problems or their physical manifestations observed by a third party caused her to lose a job.
Nor can I conclude that the testimony of Cravens, Maloney and Wood was merely harmless, even if McDaniel’s testimony, or O’Hara’s version of McDaniel’s testimony, is considered evidence of special damages. The testimony of her emotional state and her refusal to accept job offers clearly impacted the jury. O’Hara’s counsel utilized the Wood testimony in closing argument to establish her potential earning capacity to be $50,000 per year. The jury awarded $300,000 which appears to be her earning capacity times the six-year period for which she sought loss of income.
I agree that if O’Hara could establish the decline in her business resulted from the publication of the slanderous statement this would constitute special damages. The court did not limit her to that theory of proof. It allowed her to prove special damages resulting from her inability to work caused by emotional distress. This was error. Accordingly, I would reverse.
A petition for a rehearing was denied July 24, 1991, and the petition of defendants and appellants for review by the Supreme Court was denied October 3, 1991.
Judge of the Municipal Court for the San Diego Judicial District sitting under assignment by the Chairperson of the Judicial Council.
All statutory references are to the Civil Code.
(See Ind. Code, §§ 34-4-14-1; 34-4-15-1 (1990); Iowa Code, §§ 659.2; 659.3 (1989); Ky. Rev. Stat., § 411.051 (1991); Neb. Rev. Stat., § 25-840.01 (1989); and Nev. Rev. Stat., §§ 41.331; 41.338 (1989).)
Several states have held similar retraction statutes unconstitutional because they prevent many defamed plaintiffs from recovering damages for actual injuries and emotional suffering. *1121(See Boswell v. Phoenix Newspapers, Inc. (1986) 152 Ariz. 9 [730 P.2d 186]; Madison v. Yunker (1978) 180 Mont. 54 [589 P.2d 126]; Hanson v. Krehbiel (1904) 68 Kan. 670 [75 P. 1041].)