"It takes 20 years to build a reputation...and 5 minutes to ruin it." ~ Warren Buffet
Reputation - a difficult term to define. It is an amalgamation of social perceptions, subliminal impressions, skills, branding, word-of-mouth and first hand experiences. For businesses, reputation is an essential and irreplaceable asset. It is among the first considerations in trust building. It is frequently the basis of customer decisions and it can attract - or repel - talented employees. Once damaged, reputations can be difficult to repair. Second chances can be rare, if they come at all.
Reputational damage is always painful but it is especially so when the injury is the result of false or unfounded statements by customers, disgruntled employees, unethical competitors or persons with a grievance against the owners. The proliferation of social media, review sites and blogs magnifies the impact of any negative comments: there is little likelihood of criticism going unnoticed.
Compounding the problem is the tendency of people to remember negative events more than positive ones and to use stronger words to describe them. The title of one article on the subject says it all, "Bad is Stronger than Good."[1] In practical terms, it takes many more positive reviews or interactions to mitigate negative ones. Warren Buffet was right.
When reputational injury does occur, reputational marketing experts have an extensive toolkit, ranging from establishing or enhancing a positive on-line presence to a total re-branding including changes to the company name and intellectual property. Such repairs are costly. Moreover, they do nothing to deter or temper the behavior of vicious and vindictive posters. Such bad actors are free to post and repost, generally diluting the impact of marketing dollars spent to repair the damage. Such cases may require more than reputational repair; they may require legal action to recover the funds necessary to undo the damage and to ensure that the poster does not continue a campaign of vilification.
Actions against the Poster
Laws protecting business and personal reputations originated in an era of print media. Nonetheless claims for defamation continue to be among the most common claims brought by plaintiffs against internet detractors. Defamation occurs when a person or business publishes a false, derogatory statement about another person or business that causes injury. When such statements are in writing or posted to the internet, they are termed "libel."
While defamation law varies somewhat from state to state, plaintiffs seeking to establish a claim must prove that (i) a defendant made a statement about the plaintiff; (ii) the statement was false; (iii) the defendant knew the statement was false or was negligent in ascertaining the truth of the statement at the time that it was posted; (iv) the statement was "published" - i.e. was disseminated to others besides the defendant and the plaintiff; and (v) the plaintiff suffered an injury because of the false statement. In those cases where a plaintiff is a "public official" or a "public figure," he must be able to prove that defendant made the statement with reckless disregard for whether or not it was true.
In addition to defamation, plaintiffs seeking damages for injury to their reputation caused by on-line posts have brought successful claims based on the tort of "false light." Although similar to defamation, there are several differences that make false light a distinctive tort. Unlike defamation in which the requirement of publication can be established if the falsehood is disseminated to even a single party - as for example a customer - false light requires wider dissemination to be actionable. While both defamation and false light require the posted statement be false, false light also requires that the statement be "highly offensive to a reasonable person."[2] Innocent misstatements are not generally actionable. Plaintiff must be able to demonstrate that the defendant was at fault when he caused the false impression, either because the poster knew the statement was false or acted with "reckless disregard" for its truth or falsity.
Action Against Subsequent Posters
The practice of "re-tweeting" information and of citing web sources and blogs can compound the reputational damage of the original post. The regurgitation of defamatory material creates a virtual "whack a mole" where the injured party successfully requires the poster to remove offensive material - only to have it to "pop-up" at another site.
Individuals who disseminate information that proves to be false are not protected from liability simply because they did not generate the original post. A plaintiff must prove all of the same elements required to establish defamation or false light in order to successfully make a claim against subsequent posters. Frequently, however, the threat of tort litigation can be sufficient to encourage such posters to take down offending material, thereby reducing reputational damage to the plaintiff.
Action Against Internet Service Providers (ISP)
Internet service providers enjoy broad protection against claims for libel and false light under provisions of the Communications Decency Act (CDA)[3] Unlike other media sources, an ISP is not liable for the defamatory materials that may be posted on its site by third parties. Section 230 of the CDA is clear: "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."[4]
Section 230 grants immunity to the ISP so long as the posted content has been created primarily by third parties.[5] Internet service providers lose their immunity when the ISP is itself a content provider. Whether an internet service provider is also a content developer is a particularized inquiry, depending on the structure of the website and the manner in which the website allows access. [6]
For an ISP, the operative rule appears to be "ignorance is bliss." Although internet service providers are not responsible for the libelous statements of third party posters, they can be held liable as distributors of libelous information if they know, or have reason to know, of its defamatory content.[7] To avoid such potential liabilities, internet service providers are frequently willing to take down material from their sites once they have been advised by a plaintiff of the libelous nature of such material.
Act Quickly To Seek Professional Advice
Legal options to reduce or repair reputational damage are multi-layered, complex - and require quick responses. Most states, including Pennsylvania and New Jersey - have a one year statute of limitations on defamation and libel actions. Absent extraordinary circumstances, this requires plaintiffs to file an action within twelve months of the posting of the material - no matter when it was discovered. Individuals or businesses that have been injured by false, disparaging claims should contact counsel as quickly as possible to determine their legal options. The first step toward repairing a reputation may be defending it.
[1] Roy F. Baumeister & Ellen Bratslavsky et al., Bad is Stronger than Good, 5 Rev. Gen'l Psych. 323 (2001).
[2] See e.g. Larsen v. Philadelphia Newspapers, Inc., 543 A. 2d 1181, 1188 (Pa. Super. Ct., 1988).
[3] 47 U.S. C. §230(c)(1), (f)(3).
[4] 47 U.S.C. §230(c)(1).
[5] Courts have held, however, that the act of selecting third party materials or minor editing of such information was not sufficient to lose the immunity of the DCA. See e.g., Batzel v. Smith, 333 F.3d 1018 (2003) (act of selecting material for internet site insufficient to void the immunity of the CDA); Donato v. Moldow, 865 (A.2d 711 (N. J. Super. Ct. 2005)(minor editing of comments and providing tips on posting insufficient to void the immunity of the CDA).
[6] See e.g., Fair Hous. Council of San Fernando Valley v. Roomates.Com LLC, 521 F.3e 1157 (9th Cir. 2008)(holding that pre-populated drop down menu was sufficient to make made defendant a content provider for purposes of the CDA).
[7] Cubby, Inc. v. CompuServe, Inc., 776 F. Suppl. 135 (1995).
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