Online Reputation Management and the Law
Contributed by John L. Hines, Jr.,
Partner at Reed Smith, LLC
April, 2009
Overview
The online environment has created unique challenges to managing reputation. These challenges arise from (1) seismic changes in the architectures and vehicles of our communication, (2) the reduced costs of publishing to wide audiences, (3) our new willingness to say things under the cloak of anonymity that we might not have said in the pre-Internet days, and (4) a new body of law that, while admirably promoting the interests of the First Amendment and a robust Internet, has arguably offered little in the way of protection to the victims of defamatory speech.
Anyone can now be a publisher and the audience is potentially unlimited. New vehicles for communication over the net are popping up daily: thousands of blogs, chat forums, Twitter, Face Book, discussion sites, virtual reality sites, ratings sites (rating just about anything you can imagine), consumer complaint sites, college gossip sites. Many of these sites encourage the ugly and salacious. A negative comment can be made available to anyone connected to the Internet. And, if you are not a party to the blog or the site on which the negative comment appears, chances are you will happen upon the comment when you “google” the person who is the subject of the negative comment. What’s worse, the Internet never forgets. Like the commercial about “Las Vegas,” what happens on the Net, frequently stays on the Net—but with much different consequences than a private weekend in Las Vegas, it stays forever and is open for inspection by millions of people.
So, the architecture of the Internet makes it possible to reach an unlimited audience with a flip of the switch and a push of the send button—and at virtually no cost. There are few barriers to people speaking their mind and saying what they want. Furthermore, because people can cloak themselves in anonymity, they are more and more choosing to express themselves with unrestrained, hateful and defamatory speech. These tendencies, encouraged exponentially by the technology and cost structures, are likely to be further exacerbated under circumstances such as the current economic crisis where people are experiencing extraordinary frustration and fuses are short.
And, words can hurt. Defamation can destroy reputations. For individuals, false postings can be extraordinarily painful and embarrassing. For corporations, a false statement can mean loss of shareholder confidence, loss of competitive advantage, and diversion of resources to solve the problem.
What does the law have to say about this? Shouldn’t there be a remedy? Who is liable for this kind of hurtful conduct?
Defamation - A Primer on Basic Principles
Free speech remains a predominant value and the law of defamation is best seen as a “reluctant” carve out of what is otherwise the right largely to say anything you want. Thus, for example, while the law allows one to wait as long as five or seven years to bring many other types of claims, many states require defamation claims to be brought within a much shorter time period, say one or two years. Also, proving defamation cases can be often more challenging than other types of claims. Unless a claim falls within a class of cases called “defamation per se,” many states require the person asserting the claim to identify exactly the type of economic harm they suffered as a result of the defamation. This can be very challenging at the pleading stage of a case because frequently there is no specifically identifiable harm—and the harm is simply a general harm to reputation and/or the pain and suffering of seeing your name associated with scandalous matter. In these cases, without a specifically identifiable harm, plaintiffs may find their cases thrown out of court.
There are lots of other twists and turns to the law of defamation that make it challenging to prevail in a defamation case. For example, the law jealously guards statements that might be construed as mere opinions, as opposed to statements of fact, and courts frequently construe a harmful comment as merely non-actionable opinion. Public figures—people in the news—frequently have an added hurdle of showing that the speaker acted with malice and reckless disregard of the truth-- a much higher standard than a simple negligence standard that is arguably required to attach liability for a defamatory comment.
Although the law may vary from jurisdiction to jurisdiction, to make a case for defamation, a plaintiff must generally prove: “(a) a false and defamatory statement concerning another; (b) an unprivileged publication to a third party; (c) fault amounting at least to negligence on the part of the publisher; and (d) either actionability of the statement irrespective of special harm or the existence of special harm caused by the publication.” Restatement, Second, Torts § 558.
A written defamation is frequently referred to as a “libel;” an oral defamation is often referred to as “slander.”
With respect to element (a) above, the statement (whether libel or slander) must be “defamatory” as well as false. “A communication is defamatory if it tends so to harm the reputation of another as to lower him in the estimation of the community or to deter third persons from associating or dealing with him.” Restatement, Second, Torts § 559. In the case of a for profit corporation, the statement is defamatory if it “tends to prejudice it in the conduct of its business or to deter others from dealing with it. . . .” Restatement, Second, Torts § 561.
A defamatory statement will normally consist of a statement of fact. Opinions are generally privileged (Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990), “but a statement [in the form of an opinion] is actionable only if it implies the allegations of undisclosed defamatory facts as the basis for the opinion.” Restatement, Second, Torts, § 566. For example, if “A writes to B about his neighbor C: ‘I think he must be an alcoholic.’ A jury might find that this was not just an expression of an opinion but that it implied that A knew undisclosed facts that would justify his opinion.” Id., Illustration 3.
Frequently, litigation involves determining whether a statement is a statement of fact or a non-actionable statement of opinion. Courts might consider factors such as the following when determining whether a statement constitutes protected opinion: (1) precision of the statement; (2) the objective verifiability of the statement; (3) literary context of the statement; and (4) public and social contexts of the statement. See, e.g., Moriarty v. Greene, 315 Ill. App. 3d 225, 235, 732 N.E.2d 730, 740 (1st Dist. 2000).
Traditionally, republishers—people who repeat or “republish” content – have been liable just as though they were the original speaker. Distributors of the content—entities such as book stores, libraries and news stands – are potentially liable for distribution of defamatory content, but arguably only if they have knowledge of the defamation. The qualified immunity (knowledge based) provided to distributors acknowledges a public policy that seeks to encourage rather than deter these kinds of activities. We would have many fewer operators of book stores and news stands entering the marketplace if liability for defamatory content was not conditioned on their actual knowledge of defamatory content. As discussed below, however, the federal law has extended this immunity even further for these entities in the online context; and, this new extension presents special challenges for reputation management.
Defamation is closely linked to the related tort of trade libel, but there are differences. Trade libel involves the false disparagement of a product rather than the reputation of a person or corporation. The statement “ABC Car Company built engines for the Nazis” might be a defamation if untrue, whereas the statement “cars manufactured by ABC Car Company accelerate slower than the competition” would a trade libel if it was untrue.
The law of online defamation
As noted above, defamation in the online context presents special challenges for the victims. If an individual or corporation believes that he or it, as the case may be, has been defamed, there are two logical targets for obtaining relief: the speaker of the words and the “carrier” or “republisher” of the words (i.e., the website, the blog, the chat room operator, etc.).
Obtaining relief from the speaker of an online defamation is problematic for a number of reasons. First, the harm inflicted by the speaker frequently outstrips the speaker’s financial resources to compensate the victim. This is particularly true in the cases of disparagements of large corporations where the speech may directly affect the stock price. Second, the speaker is frequently anonymous and elusive. Third, even if the speaker can be located, removing his or her cloak of anonymity may well run into costly First Amendment or privacy challenges.
The right to speak anonymously has long been recognized as a part of the First Amendment right to free speech. Buckley v. Am. Constitutional Law Foundation, 525 U.S. 182, 200 (1999); McIntyre v. Ohio Elections Commission, 514 U.S. 334, 357 (1995). However, the right is not absolute and can be limited in instances where the anonymous speaker is violating the law or another person’s rights. Columbia Ins. Co. v. seescandy.com, 185 F.R.D. 573, 578 (N.D.Cal. 1999). See generally, Chaplinsky v. State of New Hampshire, 315 U.S. 568 (1942) (limiting First Amendment rights in matters involving libel, obscenity and other illegal conduct). Although the requirements vary from jurisdiction to jurisdiction, some courts will enforce a subpoena that seeks information identifying an anonymous poster only after the party requesting the information presents justification sufficient to override the applicable First Amendment interests. The process might include the following: (1) plaintiff makes reasonable efforts (perhaps through the anonymous speaker’s ISP) to notify the speaker of the claim and request for information; (2) the submits to the court the exact statements giving rise to the defamation claim; (3) the plaintiff submits a proposed a pleading that makes a prima facie case on each element of the claim; (4) the plaintiff submits sufficient evidence on each element of the clam; and, (5) the court balances the First Amendment interests against the interests identified in the complaint. See, Dendrite v. Doe, 775 A.2d 756 (N.J. App. 2001); Immunomedics, Inc. v. Doe, 775 A.2d 773 (N.J. App. 2001); Doe v. 2TheMart.com, 140 F.Supp.2d 1088 (W.D. Wash. 2001). Other courts are recognizing privacy considerations to require similar showings. State v. Reid, 945 A.2d 26 (N.J. 2008) (noting “[u]sers make disclosures to ISPs for the limited goal of using that technology and not to promote the release of personal information to others,” court holds internet subscriber information subject to state constitutional right of privacy). The burden created by these cases goes well beyond the normal showing required to obtain information via a subpoena.
Finding out who is responsible for defamatory content may be further complicated by the format in which the information appears. Some courts have taken the view that blogs, depending on the nature of their content, may effectively be like a newspaper and entitle those “reporting” in the blog to a reporter’s privilege as to the source of the information. O'Grady v. Superior Court (Apple Computer, Inc.), 39 Cal.App.4th 1423 (Sixth Dist. 2006).
Obtaining relief from the blog, website, ISP or other service “hosting” the speaker’s defamatory remark will likewise be difficult. In the early days of the Internet, it was thought that the operators of these types of entities would be liable as publishers or at least as distributors (assuming knowledge of the content). Cubby v. Compuserve, 776 F.Supp. 135 (S.D.N.Y. 1991); Stratton Oakmont v. Prodigy, 1995 WL 323710 (N.Y. Sup. Ct.). In Cubby, the court held that Compuserve was the “functional equivalent” of a traditional news vendor in its operation of a discussion site on which someone had posted a defamatory comment. The court held that Compuserve would have been liable if it had knowledge of the posting (which it did not). In Stratton, the court held Prodigy liable in connection with its Money Talks bulletin board on which someone had posted an accusation of securities fraud against the plaintiff. The court held that Prodigy was a publisher because of the extent of its editorial control, monitoring and other activities.
In considering the direction of Internet liability for speech torts, policy makers and Congress were concerned about what they perceived to be some of the incentives created by Stratton and Cubby. In effect, Stratton instructed that if a site operator takes overt steps to monitor and control its site and otherwise self-regulate, it might be strictly liable for a mistake– even if the operator had no knowledge of the alleged defamatory content. The incentive was arguably, then, not to monitor and self-regulate. On the other hand, Cubby instructed that if the operator knows about the defamation, it is liable if it does not do something to stop the conduct. Cases like Cubby arguably created an incentive to take down any potentially dangerous information to avoid liability—and thus, according to some, threatened to chill speech and dilute a robust exchange of ideas.
As a result, in 1996 Congress enacted the Section 230 of the Communications Decency Act (“CDA”) which effectively provides a certain immunity to Internet entities that act as “publishers” or “distributors” of someone else’s (electronically provided) content. The act is designed to encourage a robust Internet and the free flow of ideas. While achieving laudable First Amendment goals, however, Section 230 arguably leaves victims of defamation with little remedy in the courts.
Sec. 230(c) of the CDA provides as follows:
No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.
The CDA defines an “interactive computer service” (“ICS”) very broadly and it has been interpreted to include websites and other services accessible by multiple parties over the Internet. Schneider v. Amazon, 31 p.3d 37 (Wash. App. 2001); Stoner v. Ebay, 2000 WL 1705637 (Cal. Superior Ct. 2000). Under the CDA, an “information content provider” means “any person or entity that is responsible, in whole or in part, for the creation or development of information provided through the Internet or any other interactive computer service.” So long as the ICS is not involved in the creation and development of content, it will be “immune” from a defamation claim under the statute. See generally, Zeran v. AOL, 129 F.3d 327 (4th Cir. 1997).
One of the key issues surrounding Section 230 is what constitutes “creation and development” of content. In other words, when is the website, chat room, social networking site or other content host merely an ICS and when does it sufficiently participate in the creation and development of content so as to become an “information content provider” and “potentially” liable for the posting. ISPs and many companies in the business of hosting content have an interest in maintaining a broad construction of the CDA immunity and narrowly confining the construction of “creation and development” to activities involving more significant contribution to content. Companies who are less involved in hosting content and who are comparatively more concerned with managing their reputations may be more receptive to a narrow immunity and a less restrictive concept of creation and development. Clearly, routine activities like minor editing an online piece do not constitute “creation and development” so as to transform an ICS into an information content provider. Ben Ezra v. AOL, 206 F.3d 980 (10th Cir. 2000).
One recent case that provides illumination on the issue (and some solace to those urging a narrowing of the immunity) is Fair Housing Council of San Diego v. Roommates.com, LLC. 521 F.3d 1157 (9th Cir. 2008) (en banc). In that case, Roommates.com purported to provide web based services allowing subscribers to post and search for housing opportunities and possible matches with other subscribers. Before posting a listing, an individual would have to complete a subscriber profile including information about gender, sexual orientation and whether he would bring children to the housing option—and also information about roommate preferences with respect to the same categories. The questions were presented via a drop-down menu with pre-programmed answer possibilities. The subscriber was also encouraged to provide “additional comments” describing themselves and their preferences in an open ended essay format. The site then programmatically compiled the data and produced a searchable subscriber page on each subscriber. The Roommates.com search engine would allow subscribers to search for matches based on the pre-programmed preferences entered by the subscribers.
The Fair Housing Council brought suit claiming that Roommates.com violated the federal fair housing and California discrimination laws because its business promoted discrimination in the housing market. Roommates.com countered that even if protected information (i.e., information about gender, sexual orientation and family status) was used in housing decisions, Roommates.com did not create that information. Specifically, Roommates.com claimed that it did not create the information contained in the profiles and that it was immune under Section 230 of the CDA.
At issue with respect to whether Roommates.com participated in the creation and development of content were (i) the questions themselves, (ii) the creation of the subscriber profiles and search results in the matching process and (iii) the voluntary essay content.
Holding that only the voluntary essay content gave rise to CDA immunity, a majority of the Ninth Circuit en banc substituted a pragmatic vision of technology and information policy for the overly protectionist vision of the Internet that has dominated CDA decisions and Internet jurisprudence generally (Id. at 1164 n.15):
The Internet is no longer a fragile new means of communication that could easily be smothered in the cradle by overzealous enforcement of laws and regulations applicable to brick-and-mortar businesses. Rather, it has become a dominant-perhaps the preeminent-means through which commerce is conducted. And its vast reach into the lives of millions is exactly why we must be careful not to exceed the scope of the immunity provided by Congress and thus give online businesses an unfair advantage over their real-world counterparts, which must comply with laws of general applicability.
The Ninth Circuit concluded that Roommates.com was immune for the content provided in the open ended essay because under no circumstances could Roommates.com be deemed to have participated in the creation and development of that content. On the other hand, the majority ruled that Roommates.com was not immune for the questionnaire itself or for the assembling of the answers into subscriber profiles and related search results using the profile preferences as “tags.” The Court noted that the questions relating to sexual preferences posted by Roommates.com were inherently illegal and also caused subscribers to post illegal content themselves by answering the questions. It was also illegal to assemble and organize the subscriber profiles according to the protected criteria; the Court noted that even though the subscribers provided the content (through answers to questions), Roommates.com assisted in developing the content by providing the questions with drop down menus and then assembling the answers into the searchable subscriber profiles. Id. at 1165-67. It should be noted that, in vigorous dissent, three of the eleven judges believed that the majority had misread the CDA, that the opinion is inconsistent with prior cases and that the Court’s ruling would wrongly expand the potential liability of Internet service providers.
Nevertheless, the totality of the majority’s opinion purports to stand as a strong statement against any notion of absolute intermediary immunity. Cf, Chicago Lawyers' Committee for Civil Rights Under Law, Inc. v. Craigslist, Inc, 519 F.3d 666, 669-70 (7th Cir. 2008) (rejecting that Section 230 confers an absolute immunity). In light of the opinion, ICSs would do well to pay careful attention to how they might be encouraging or inducing illegal conduct. Although emphasizing that close cases should continue to be resolved against imposition of liability, the court emphasized that “[t]he message to website operators is clear: If you don't encourage illegal content, or design your website to require users to input illegal content, you will be immune.” 521 F.3d at 1175. The Court offered some suggestions as to what would and would not constitute immunized activities (521 F.3d at 1169):
1. "If an individual uses an ordinary search engine to query for a “white roommate,” the search engine has not contributed to any alleged unlawfulness in the individual’s conduct; providing neutral tools to carry out what may be unlawful or illicit searches does not amount to “development” for purposes of the immunity exception."
2. "A dating website that requires users to enter their sex, race, religion and marital status through drop-down menus, and that provides means for users to search along the same lines, retains its CDA immunity insofar as it does not contribute to any alleged illegality; this immunity is retained even if the website is sued for libel based on these characteristics because the website would not have contributed materially to any alleged defamation."
3. "Similarly, a housing website that allows users to specify whether they will or will not receive emails by means of user-defined criteria might help some users exclude email from other users of a particular race or sex. However, that website would be immune, so long as it does not require the use of discriminatory criteria."
4. "A website operator who edits user-created content—such as by correcting spelling, removing obscenity or trimming for length—retains his immunity for any illegality in the user-created content, provided that the edits are unrelated to the illegality."
5. "However, a website operator who edits in a manner that contributes to the alleged illegality— such as by removing the word “not” from a user’s message reading “[Name] did not steal the artwork” in order to transform an innocent message into a libelous one—is directly involved in the alleged illegality and thus not immune."
Conclusion
The legal landscape continues to pose a challenge for managing risk to reputation injury in the online environment, particularly in light of the rights accorded to anonymous speech and the immunities accorded to interactive computer services. In the meantime, individuals and corporations should consider the totality of the tools available to them for minimizing and managing these risks and consider opportunities that may be available for urging continued development of a pragmatic approach in the law that reflects a fair balance between important First Amendment interests and victim's rights.