Here is what the case law is in Oregon:
To establish a claim for defamation, a plaintiff must show that the defendant made a defamatory statement about the plaintiff to a third person. Wallulis v. Dymowski, 323 Ore. 337, 342-43, 918 P.2d 755 (1996). A defamatory statement is a false statement that would subject the plaintiff "to hatred, contempt or ridicule * * * [or] tend to diminish the esteem, respect, goodwill or confidence in which [the plaintiff] is held or to excite adverse, derogatory or unpleasant feelings or opinions against [the plaintiff]." Farnsworth v. Hyde, 266 Ore. 236, 238, 512 P.2d 1003 (1973) (internal quotation marks [*348] omitted; [***15] ellipses and first bracketed material in original, others added).
If you can establish that the defamatory statements are untrue and that they subject you "to hatred, contempt or ridicule" you can recover damages without having suffered any actual economic loss.
You can file this suit for defamation seeking no more than $7,500.00 in the small claims
court nearest where she lives. You can have her served at her place of business.
If you want to take an intermediate step, then you can send her a CEASE and DESIST letter, demanding that she immediately stop all defamatory behavior and respond to you in writing withdrawing her statements and apologizing. If you do not receive the apology letter within 15 days, you will sue her for defamation.
Then you pull the trigger and file the lawsuit. Small claims court is easy, they have forms you fill out that are self explanatory and the cost is somewhere around $100.
Please let me know if you need further information.