defamation lawsuit

Larry David

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Unhappy customers are a fact of life for small businesses.  In the past, if a customer was was not pleased about the Miso Black Cod he would simply kvetch to a hundred of his closest friends and never return (unless he was Larry David).

Web 2.0 has changed the way people complain.  Disgruntled customers now spend their time logging on to Yelp, Facebook and “Gripe” sites to express their feelings to the net citizens of the world.  A  poor review on Yelp could create losses of thousands of dollars.  If the review is defamatory, should you sue?

The New York Law Journal (pay wall) reports that the bar is very high for a company to win a defamation lawsuit against an individual. In Intellectual Art Multimedia v. Milewski, New York Supreme Court Justice Hon. Judith Gische recently ruled against the company in its Internet defamation lawsuit against a customer who posted negative comments on the Rippoff Report.

Intellectual Art runs the Swiss Finance Academy which operates a school of business. It sued a customer for defamation due to a negative review. Here is a sample of the alleged defamatory comments:

  • “[t]hey tell you where the location is then a week before the program starts they change the location and say no refunds whatsoever.”
  • “everything they taught was a “JOKE.”

Judge Gische decided that the “speech [was] merely an alleged statement about [the customer’s] personal opinion about the quality of the services of the plaintiff (Intellectual Art).”  In addition, the judge ruled that on issues dealing with advocating on part of the consumer, courts are reluctant to stifle criticism of goods or services.

Conclusion

Don’t get me wrong,  small businesses can still sue a customer for defamation. If the remarks are more than criticism, contact a lawyer.  However, in this era of transparency, it is much cheaper to engage in business practices that foster trust than to start a  lawsuit.  Use Google Alerts and establish a Twitter account to monitor your brand.  If a customer is unhappy, ask him why. Companies such as Zappos built an empire on listening to their customers through social media.  So should you.

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Your employees are probably participating in social networking sites such as Facebook, LinkedIn and Twitter. But what are your workers doing on Facebook while on the clock? Are they networking or are they sharing their 5 favorite beers? On the one hand, you want to trust your employees and make them feel like they have autonomy to perform their work duties. On the other hand, you are paying them to work and you want them to present themselves professionally.

Recently, staffers of The Wall Street Journal were provided a compiled list of rules for “professional conduct” which regulates online behavior. Should your company follow the lead of the Wall Street Journal and draft a written social networking policy advising what your employees can post while working at the office? If you would like to limit potential company liability to lawsuits, the answer is yes. Here are 5 reasons why:

1. A written social networking policy may shield your Company from defamation lawsuits. What happens if your employee starts posting on Facebook untrue statements about a competitor? Without a written social networking policy, your Company could be sued for defamation.

2. Potential disclosure of Company proprietary information. Let’s say that your business has created the next killer app that will be ready to launch in 3 months. By having a non-disclosure section written into your social networking policy, your employee would be on notice and could be held liable for posting on LinkedIn such information.

3. Your business’s social networking use policy should encourage positive and constructive use of the social networking sites, as well as to prevent the use of such sites for personal or inappropriate reasons. You could be held liable for anything that your employees say of a personal nature on social networking sites.

4. Potential use in litigation. Information disseminated by your employees on social networking sites can be uncovered by a potential adversary and used against your company in litigation. Therefore, you should be clear about the type of topics that can be discussed on social networking sites.

5. Intellectual Property. Trademark and Copyright laws extend to what your post on social networking sites. Your social networking policy should make clear that your employees should refrain from posting trademarked or copyrighted material while representing the company.
So, your Company should regulate social networking use in a more expanded way than the way you regulate other Internet use. By being upfront about the potential problems of social networking, you could help both you and your employees successfully utilize this tool and avoid unwanted lawsuits.

Further Resource:

Online database of social networking policies.

Contact the Law Office of Frederic R. Abramson at 212-233-0666 for more information about social networking policies.

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