Defamation, Libel and Slander

Does Facebook “Like” Button Give Rise to First Amendment Rights? Federal Appellate Court Set to Decide the Issue.

May 15, 2013 | Peter S. Lubin and Patrick Austermuehle

Many of us use Facebook “likes” every day to express our feelings and opinions on the internet. In fact, according to Facebook, around 3 billions “likes” and comments are made on the social network site on a daily basis. However, it is still a relatively new form of expression and, as such, might not get the protection of the American Constitution’s first amendment.

The issue has been brought before a judge in Hampton, Virginia where a deputy, Daniel Ray Carter, was fired by his sheriff. Carter sued for violation of the First Amendment after he was fired, alleging that he was let go as a result of “liking” the Facebook page of his boss’ political opponent during the town’s 2009 sheriff election. According to the lawsuit, Hampton sheriff B.J. Roberts said to Carter, “You made your bed, now you’re going to lie in it – after the election, you’re gone.” About five months after Roberts’s re-election, Carter was fired, along with five other employees who either supported Carter’s opponent or did not actively campaign for Carter during the election.

U.S. District Judge Raymond A. Jackson dismissed the suit, saying that the U.S. Constitution does not protect clicking the thumbs-up button on a Facebook page. According to Judge Jackson, the “like” button is not substantial enough of a statement to be considered free speech. In his decision, he wrote, “Merely ‘liking’ on a Facebook page is insufficient speech to merit constitutional protection.”

An appeal by Carter and his former co-workers is being reviewed by the U.S. Court of Appeals for the 4th Circuit. The American Civil Liberties Union has also filed an amicus brief supporting the effort to overturn Judge Jackson’s ruling. To demonstrate the power that a single click can have these days, the ACLU cited re-tweeting, signing a petition, and donating to a campaign online as examples. If the appeals court rules against Carter, the ACLU argues that all of these actions will be ineligible for protection under the Constitution’s first amendment. Rebecca K. Glenberg, the legal director of the ACLU of Virginia, told the Washington Post that “Pressing a ‘like’ button is analogous to other forms of speech, such as putting a button on your shirt with a candidate’s name on it.” The ACLU argues that, as the technological world grows, we must protect the news ways of communication which will inevitably develop.

Facebook has also come forward in support of Carter and the ACLU, saying that a Facebook “like” is the modern equivalent of putting up a front-yard campaign sign. Facebook will get a chance to argue their side of the case before a three-judge panel of the 4th Circuit Court of Appeals. The social media company will be allowed three minutes of oral argument when the panel hears the case.

Public Citizen Defends Consumers’ First Amendment Rights to Criticize a Business On Yelp

May 9, 2013 | Peter S. Lubin and Patrick Austermuehle

Our law firm is devoted to protecting consumers’ First Amendment rights to truthfully and accurate criticize businesses particularly businesses who advertise heavily on the internet. Consumers should be able to vigorously voice their opinions about car dealers and other businesses who engage in fraudulent advertising and other unfair business practices. Most big consumer businesses now force consumers to agree to secret binding arbitration of disputes in arbitration fora that often are stacked in favor of business or which business funds pay for. This makes online criticism more important as long as the critic attempts to be truthful and honest and isn’t acting a business in reckless disregard of the truth. In that regard with we were very interested to see a new posting by Public Citizen on the subject of protecting online criticism.

Paul Alan Levy reports about Public Citizen’s recent efforts in a defamation suit allegedly designed to stop citizens from criticizing a carpet cleaning business on Yelp:

You can’t live in the DC area and not encounter the pervasive advertising for Hadeed Carpet Cleaning, from mailed coupons and display advertising in the Washington Post that promise unbelievably low prices, to classic rock broadcast from the “Hadeed.com Studios” and advertising during Washington Capitals games. But regular users of pages about Hadeed on the Yelp web site quickly learn Hadeed’s dirty secret — more than thirty of the eighty-odd reviews posted there complain that the advertised prices are routinely not honored.

Even one of Hadeed’s Yelp admirers, who gave Hadeed four of five stars for the quality of its work, ridiculed the complainers in these terms: “I can give a life lesson to the people who only wanted the $99 special, there is no such thing! Every wall to wall cleaning company uses that as a way to lure you in but no one will charge you $99.” She also gives her secret about how to protect against unannounced price increases from Hadeed: pay in advance!
Apparently hoping to deter further criticism, Hadeed has singled out seven anonymous reviewers as defendants in a defamation lawsuit. It does not deny that its service staff routinely demand higher-than-advertised prices when they show up to do the work, but instead claims that it suspects, based on a mysterious review of some customer database, that these seven reviews were really posted by some unnamed competitor. Unlike some other ISP’s lately, Yelp is standing up for its users’ privacy, and so refused to comply with a Virginia subpoena because (among other reasons) Hadeed never provided any evidence that the gist of the reviews was false. Hadeed moved to compel compliance, and the trial judge, refusing to apply the otherwise-broadly-accepted Dendrite test, ordered compliance because it felt that it was enough for Hadeed to show that the statements “may be tortious.” And when Yelp refused to comply – because Virginia requires non-party discovery recipients to commit contempt of court to get the right to appeal — the court found it in contempt.

In an appellate brief that we have filed today on behalf of Yelp, we make two basic points. First, Virginia should agree with other states that demand both a legal and a factual showing that the lawsuit has merit. In that regard, read carefully, Hadeed’s defamation claim asserts only that the individual reviewers were not really customers, and Hadeed is not defamed by false statements about whether a given defendant was a customer. Nor, indeed, has Hadeed offered any reason to credit its supposition that the seven reviewers were not customers; what evidence there is in the record points in the other direction.

We also argue that a California company like Yelp should not be subject to a Virginia subpoena just because its web site is accessible in Virginia and because Virginia companies like Hadeed advertise on the web site. When AOL was based in Virginia, litigants in other states had to get Virginia subpoenas to demand identifying information about AOL users; by the same token, Hadeed should have to use the normal interstate discovery procedures when it wants identifying information about Yelp users from ISP’s in other states.

The work of Public Citizen to protect consumers’ free speech rights is commendable. If you cannot obtain a free legal defense to defamation suits, consumers must turn to a private attorney. Often times consumers home owners’ insurance provides coverage for defense costs when the consumer is sued for online reviews. We defend consumers in those suits and help them arrange for the defense costs to be covered by their insurance carriers.

Court Orders Customer to Take Down Customer Review on Yelp

December 12, 2012 | Peter S. Lubin and Patrick Austermuehle

Biotechnology Company Files Product Defamation Lawsuit Against Financial Journalist

January 18, 2011 | Peter S. Lubin and Patrick Austermuehle

As Chicago Internet product disparagement litigation attorneys, we were interested to see reports about a product disparagement lawsuit filed in early April against financial publication TheStreet.com and one of its reporters. Fierce Biotech reported April 7 that Canadian drug maker Generex has sued TheStreet and columnist Adam Feuerstein for libel, product disparagement and injurious falsehood. The lawsuit, filed in New York state court, seeks $250 million in damages for what Generex called “numerous defamatory statements” about the company, its leaders and its flagship product, an insulin delivery system allowing the hormone to be absorbed through the lining of the mouth, obviating the need for injections. In its filing (PDF), Generex said the statements caused its stock to drop nearly 8%, losing the company $12 million in market capitalization and the goodwill of third parties like investors.

Product disparagement laws prohibit outright false claims about another company or person’s products or services. In its April 6 press release announcing the lawsuit, Generex claims TheStreet and Feuerstein made such false claims, with the company’s general counsel saying they “[spread] categorical falsehoods” in articles “that go well beyond the expression of disparaging opinion or fair comment.” The company is referring to two articles authored by Feuerstein in March of 2010. In the first, he wrote that the company’s stock “is a total bust” because its product “is more fiction than science,” has not been tested sufficiently and would not be in demand. He also claimed the product had not been discussed in medical journals or presented at medical conferences, but TheStreet later retracted that statement when the company contacted it.

In the second article, Feuerstein went further and said the company’s work is “a ruse to perpetuate a 15 year-long stock promotion scheme.” He said the studies on its product, Oral-lyn, were extremely small and poorly designed. A Phase III trial in the United States, the first step toward FDA approval, was underenrolled and insufficient for FDA approval, he added, saying this showed that “Generex isn’t interested in seriously developing an oral insulin spray.” On the day Generex announced its lawsuit, TheStreet published a third Feuerstein article noting that approval of Oral-lyn was revoked by regulators in India — the largest country where it had been approved — about a year earlier, but that Generex had failed to notify investors. A fourth article dated April 29 faulted the company for mischaracterizing the FDA’s permission to use Oral-lyn experimentally as a “mini-approval.”
As Illinois online business libel lawyers, we believe winning this claim will be an uphill battle for Generex. To win, the company must convince a jury that Feuerstein’s articles were intended as statements of fact, not opinion. This could be difficult with the first article, because Feuerstein was responding in that piece to a direct question from a reader asking “What are your thoughts?” about Generex stock. The next sentence started with the phrase “I think…”, which seems to indicate that the following information was an opinion. The second article may offer more hope for Generex, because it doesn’t seem to contain any such clear statements indicating opinion. However, Generex would still have to show that the articles, which are intended as stock-picking advice, are not inherently opinion. It may also have to show “actual malice” by Feuerstein and TheStreet, which means reckless disregard of the truth or knowledge of falsity.

Newspaper Not Liable for Police Report Mistake Under Fair Report Privilege

August 31, 2010 | Peter S. Lubin and Patrick Austermuehle

Our Illinois defamation attorneys and Chicago business law lawyers were interested to see a recent Second District Court of Appeal case affirming the fair-report privilege for newspapers accused of defamation. That was one cause of action in Eubanks v. Northwest Herald Newspapers, No. 2-08-0812 (Ill. 2nd 2010), in which plaintiff Carolene Eubanks also alleged false light invasion of privacy. Eubanks was upset at the Northwest Herald for printing a police notice that she had been arrested for retail theft and attempted obstruction of justice. In fact, another woman was arrested; the police had made a mistake in their original report. Unfortunately, the mistake was caught too late and the report went to print. The newspaper printed a retraction the next day explaining that Eubanks was not the person arrested.

Nonetheless, Eubanks filed a lawsuit against Northwest Herald Newspapers about five months later, alleging defamation and false light invasion of privacy. The newspaper moved for summary judgment, asserting that it was immune from defamation lawsuits under the fair report privilege. That privilege shields the media from lawsuits as long as they use official records or reports — including police reports — and fairly and accurately report that official information. The motion included an affidavit from the newspaper employee who received the original, incorrect police report via email, Brenda Schory, as well as the follow-up report correcting it. Because the matter took place on a New Year’s holiday weekend, Schory said, she didn’t open the second email until the incorrect report had already been published.

The trial court denied this motion for summary judgment, saying it provided no evidence of whether another employee might have opened the email before Schory could. In response, the newspaper made another motion for summary judgment, this time including an affidavit from the employee that maintains its computer system, Ben Shaw. Shaw said he had looked through computer records and was able to prove that no employee opened the second email until late in the morning the incorrect story had been published. The trial court granted summary judgment this time. Eubanks appealed, arguing that the fair report privilege does not apply to the article at issue, and that a jury should decide whether it recklessly abused the privilege.

The Second District first addressed the issue of whether the fair-report privilege applied at all. Illinois law says the privilege applies if the report is “accurate and complete or a fair abridgement” of the official information. Eubanks argued that the Northwest Herald article was not fair and complete because it did not contain the information from the second email. The Second disagreed. Relying on caselaw including Gist v. Macon County Sheriff’s Department, 284 Ill. App. 3d 367, 376 (1996), the court noted that the law asks only whether the publication was accurate, not whether the information contained in it is actually true. The newspaper had no obligation to report the contents of the second email until it opened that email, the court said. Thus, the privilege still applies.

Next, the court tackled the argument from Eubanks that summary judgment was inappropriate because a reasonable juror could find that the newspaper abused its privilege by acting recklessly. To support this, Eubanks argued that the newspaper could have covered police reports or checked email over the holiday weekend. In any case, she argued that this is inappropriate for summary judgment and a jury should decide. The Second dismissed this argument as well. Most qualified privileges in Illinois can be overcome if the plaintiff can show malice, the court said. But under Solaia Technology, LLC v. Specialty Publishing Co., 221 Ill. 2d 558, 588 (2006), not even malice overcomes the fair-report privilege. That decision said the privilege can be abused only if the defendant’s report was inaccurate, for example, by omitting information or adding incorrect information. For that reason, there was no abuse of the privilege in this case, and summary judgment was appropriate.

Class Action Complaint Alleges that Yelp Extorts Businesses to Manipulate Reviews On Its Website

August 1, 2010 | Peter S. Lubin and Patrick Austermuehle

Lubin Austermuehle represents businesses caught on either side of a dispute about online or offline defamation of a business or its products or services. Our Chicago business attorneys have assisted our clients in removing damaging and false reviews from internet review sites run by their competitors. Self-publishing on the Internet, and sites like Yelp, make it easy for individuals to publish false information about a competitor or a business they don’t happen to like. Online business libel laws balance the need to protect small businesses from false and damaging information with the First Amendment right to free speech. Our Illinois trade libel and trade disparagment attorneys represent both plaintiffs and defendants in claims regarding false and misleading claims; deceptive online publishing; misuse of a trademark, logo or other identifying feature. You can contact one of our Nationwide Class Action attorneys at 630-333-0333 for a free consultation or contact one of our Chicago class action attorneys us online.

Venting Online, Consumers Can Find Themselves in Court — Our Chicago Business Law Attorneys Prosecute and Defend Online Defamation Suits

June 1, 2010 | Peter S. Lubin and Patrick Austermuehle

The below article on internet defamation appeared in the New York Times:

Venting Online, Consumers Can Find Themselves in Court
Stephen McGee for The New York Times
Justin Kurtz with his car, which was towed from his apartment complex parking lot near Western Michigan University.

By DAN FROSCH
Published: May 31, 2010

After a towing company hauled Justin Kurtz’s car from his apartment complex parking lot, despite his permit to park there, Mr. Kurtz, 21, a college student in Kalamazoo, Mich., went to the Internet for revenge.

Outraged at having to pay $118 to get his car back, Mr. Kurtz created a Facebook page called “Kalamazoo Residents against T&J Towing.” Within two days, 800 people had joined the group, some posting comments about their own maddening experiences with the company.

T&J filed a defamation suit against Mr. Kurtz, claiming the site was hurting business and seeking $750,000 in damages.

Web sites like Facebook, Twitter and Yelp have given individuals a global platform on which to air their grievances with companies. But legal experts say the soaring popularity of such sites has also given rise to more cases like Mr. Kurtz’s, in which a business sues an individual for posting critical comments online.

The towing company’s lawyer said that it was justified in removing Mr. Kurtz’s car because the permit was not visible, and that the Facebook page was costing it business and had unfairly damaged its reputation.

Some First Amendment lawyers see the case differently. They consider the lawsuit an example of the latest incarnation of a decades-old legal maneuver known as a strategic lawsuit against public participation, or Slapp.

The label has traditionally referred to meritless defamation suits filed by businesses or government officials against citizens who speak out against them. The plaintiffs are not necessarily expecting to succeed — most do not — but rather to intimidate critics who are inclined to back down when faced with the prospect of a long, expensive court battle.

“I didn’t do anything wrong,” said Mr. Kurtz, who recently finished his junior year at Western Michigan University. “The only thing I posted is what happened to me.”
Many states have anti-Slapp laws, and Congress is considering legislation to make it harder to file such a suit. The bill, sponsored by Representatives Steve Cohen of Tennessee and Charlie Gonzalez of Texas, both Democrats, would create a federal anti-Slapp law, modeled largely on California’s statute.

Because state laws vary in scope, many suits are still filed every year, according to legal experts. Now, with people musing publicly online and businesses feeling defenseless against these critics, the debate over the suits is shifting to the Web.

“We are beyond the low-tech era of people getting Slapped because of letters they wrote to politicians or testimony they gave at a City Council meeting,” said George W. Pring, a University of Denver law professor who co-wrote the 1996 book “Slapps: Getting Sued For Speaking Out.”
Marc Randazza, a First Amendment lawyer who has defended clients against suits stemming from online comments, said he helped one client, Thomas Alascio, avoid a lawsuit last year after he posted negative remarks about a Florida car dealership on his Twitter account.

“There is not a worse dealership on the planet,” read one post, which also named the dealership.

The dealership threatened to sue Mr. Alascio if he did not remove the posts. Mr. Randazza responded in a letter that although Mr. Alascio admitted that the dealership might not be the worst in the world, his comments constituted protected speech because they were his opinion.

While the dealership did not sue, that outcome is unusual, said Mr. Randazza, who conceded that sometimes the most pragmatic approach for a Slapp defendant is to take back the offending comments in lieu of a lawsuit.

In the past, Mr. Randazza said, if you criticized a business while standing around in a bar, it went “no further than the sound of your voice.”
Now, however, “there’s a potentially permanent record of it as soon as you hit ‘publish’ on the computer,” he said. “It goes global within minutes.”
Laurence Wilson, general counsel for the user review site Yelp, said a handful of lawsuits in recent years had been filed against people who posted critical reviews on the site, including a San Francisco chiropractor who sued a former patient in 2008 over a negative review about a billing dispute. The suit was settled before going to court.

“Businesses, unfortunately, have a greater incentive to remove a negative review than the reviewer has in writing the review in the first place,” Mr. Wilson said.

Recognizing that lawsuits can bring more unwanted attention, one organization has taken a different tack. The group Medical Justice, which helps protect doctors from meritless malpractice suits, advises its members to have patients sign an agreement that gives doctors more control over what patients post online.

Dr. Jeffrey Segal, chief executive of Medical Justice, said about half of the group’s 2,500 members use the agreement.

“I, like everyone else, like to hear two sides of the story,” he said. “The problem is that physicians are foreclosed from ever responding because of state and federal privacy laws. In the rare circumstance that a posting is false, fictional or fraudulent, the doctor now has the tool to get that post taken down.”
The federal bill, in the House Subcommittee on Courts and Competition Policy, would enable a defendant who believes he is being sued for speaking out or petitioning on a public matter to seek to have the suit dismissed.

“Just as petition and free speech rights are so important that they require specific constitutional protections, they are also important enough to justify uniform national protections against Slapps,” said Mark Goldowitz, director of the California Anti-Slapp Project, which helped draft the bill.

Under the proposed federal law, if a case is dismissed for being a Slapp, the plaintiff would have to pay the defendant’s legal fees. Mr. Randazza would not disclose specifics on the legal fees he has charged his clients, but he said the cost of defending a single Slapp suit “could easily wipe out the average person’s savings before the case is half done.”
Currently, 27 states have anti-Slapp laws, and in two, Colorado and West Virginia, the judiciary has adopted a system to protect against such suits. But the federal bill would create a law in states that do not have one and offer additional protections in those that do, Mr. Goldowitz said.

In Michigan, which does not have an anti-Slapp measure, Mr. Kurtz’s legal battle has made him a local celebrity. His Facebook page has now grown to more than 12,000 members.

“This case raises interesting questions,” said the towing company’s lawyer, Richard Burnham. “What are the rights to free speech? And even if what he said is false, which I am convinced, is his conduct the proximate cause of our loss?”
On April 30, Mr. Kurtz and his lawyers asked a judge to dismiss the suit by T&J, which has received a failing grade from the local Better Business Bureau for complaints over towing legally parked cars. Mr. Kurtz is also countersuing, claiming that T&J is abusing the legal process.

“There’s no reason I should have to shut up because some guy doesn’t want his dirty laundry out,” Mr. Kurtz said. “It’s the power of the Internet, man.”