PROTECTING YOUR BRAND IN THE 21ST CENTURY
In this brave new world of social media, citizen journalists, gratuitous opinions and trolls (some of whom may be your own employees), corporate brand control and protection has become a paramount concern for companies. Consumers are no longer the recipients of information generated by companies; consumers (and employees) now generate content and share it with anyone who has access to a computer or mobile device. This requires companies to employ best practices to monitor, control, restrict and remove negative and inaccurate content on a variety of platforms. When an attack on a company’s brand goes viral, there are few cures.
Addressing these concerns triggers several questions:
How does the 1st Amendment apply? What proactive and reactive measures are available? What responsibilities do websites have? Where are the courts drawing the line? What happens when you “scrub” too deep?
Some of the answers to these questions are legal, while others are practical. Whenever a company’s brand or image comes under attack, response time is minimal. As a consequence, protection comes from forward thinking and advanced preparation.
WHY IS BRAND PROTECTION IMPORTANT?
Manufacturers, distributors and service providers all possess a valuable asset: their brand. But what is a brand? A brand is a company’s promise, perception and persona. A brand is ever-evolving. Failing to protect a brand may lead to lost value and can damage a company’s reputation.
Thirty years ago, tangible assets comprised 95% of the average company’s value. Now, 75% of a company’s value is derived from intangible assets. Most companies believe their corporate brand and reputation reflects over 40% of their market capitalization1.
But why? Companies with strong brands and good reputations can charge more for the same service or product as their competitors. Strong brands also equate to strong employee retention. As a result, brand protection has become a growing priority. Just a few years ago, companies were concerned with “controlling the message” in the 24-hour news cycle. Today, the passage of just 24 minutes may be enough time to sink a company if plans are not in place to protect and respond to a social media crisis.
WHAT LAWS APPLY?
When it comes to written communications, in particular writings posted on the internet or social media outlets, a variety of laws are potentially implicated. However, unless your practice pulls you into this world on a regular basis, it is easy to make incorrect assumptions about how those laws apply to social media and your brand.
A. The First Amendment
Adopted in 1791, the First Amendment to the United States Constitution states:
Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.
As websites and chat rooms began to populate the world wide web in the 1990s, the United States Supreme Court first addressed the application of the First Amendment to the internet in Reno v. ACLU2. In its Reno opinion, the Supreme Court held that restrictions on the “display” and “transmission” of indecent communications online violate the First Amendment. Rather than grapple with how this new medium should be treated, the Supreme Court came out and held that full First Amendment protection applies unless the government can prove otherwise:
Through the use of chat rooms, any person with a phone line can become a town crier with a voice that resonates farther than it could from any soapbox. Through the use of Web pages, mail exploders and newsgroups, the same individual can become a pamphleteer. As the District Court found, ‘the content of the Internet is as diverse as human thought.’ We agree with its conclusion that our cases provide no basis for qualifying the level of First Amendment scrutiny that should be applied to this medium3.
In arriving at this conclusion, the Supreme Court distinguished the Internet from other technologies (e.g., broadcasting) and noted that “the Internet can hardly be considered a ‘scarce’ expressive commodity.”4. The Court pointed out that online communication “includes not only traditional print and news services, but also audio, video and still images, as well as interactive real-time dialogue.”5.
Since Reno, the Supreme Court has continued to allow virtually unfettered First Amendment protections to communications transmitted over the internet.
B. Libel, Defamation and Slander
At its base, defamation (which includes libel and slander) refers to false statements of fact that harm another’s reputation. Libel generally refers to written defamation, while slander pertains to oral defamation. In Rosenblatt v. Baer, Justice Potter Stewart wrote that the tort of defamation “reflects no more than our basic concept of the essential dignity and worth of every human being — a concept at the root of any decent system of ordered liberty.”6. Fearing the threat defamation suits could have on First Amendment protections, the Rosenblatt Court ruled there must be a proper accommodation between protecting reputations and ensuring “breathing space” for First Amendment freedoms.
As time passed, differences developed between how defamation applied to public and private figures. In Gertz v. Robert Welch, Inc., the Supreme Court identified two differences: (1) Public officials and public figures have greater access to the media in order to counter defamatory statements; and (2) public officials and public figures to a certain extent seek out public acclaim and assume the risk of greater public scrutiny7. In accordance, the Gertz Court established a different standard for private persons:
We hold that, so long as they do not impose liability without fault, the States may define for themselves the appropriate standard of liability for a publisher or broadcaster of defamatory falsehood injurious to a private individual.8
In other words, a private person does not have to show that a defendant acted with actual malice in order to prevail in a defamation suit. The private plaintiff usually must show simply that the defendant was negligent, or at fault.
To establish a claim for defamation, a plaintiff must usually demonstrate the following elements:
[hfmlists][li]The publication was “of and concerning” himself or herself.[/li][li]The defamatory statements were disseminated to a third party.[/li][li]The statements in question were defamatory, and something more than meant to annoy.[/li][li]The statements must be false; truth is a defense to a defamation claim. Generally, the plaintiff bears the burden of proof of establishing falsity.[/li][li]The false and defamatory statements must cause actual injury or special damages9.[/li][/hfmlists]
At the same time, there are numerous defenses and privileges to a defamation claim, including:
[hfmlists][li]Truth is generally a complete defense. Many jurisdictions have adopted the substantial-truth doctrine, which protects a defamation defendant as long as the “gist” of the story is true.[/li][li]Defamatory statements made in judicial, legislative or administrative settings by participants are considered absolutely privileged. For example, a lawyer in a divorce case could not be sued for libel for comments he or she made during a court proceeding.[/li][li]The neutral-reporting privilege protects news organizations when they publish statements, even reckless statements, made by others about a public figure even if the press suspects the statements are not true10.[/li][/hfmlists]
Companies have standing to bring suit for defamation. In doing so, the company must demonstrate that the published material has caused or is likely to cause a financial loss. If the required elements exist, a corporate plaintiff may recover presumed damages. This means that harm is presumed. In other words, no proof is required, and a fact finder may assess an amount he or she deems is appropriate11.
A corporation may also pursue special damages under a defamation cause of action. In that instance, the company must show evidence of financial loss arising from reputational injury that was caused by the defamatory material, such as a decline in the value of the company’s stock.
C. Communications Decency Privacy Act of 1996
When a company discovers negative content has been posted on the internet, one immediate response is to file suit and seek damages against the internet service provider hosting the damaging information. After all, the individual posting the material is likely judgment-proof. However, when the United States Congress passed the Communications Decency Privacy Act of 1996 (47 U.S.C. section 230) (the “Communications Decency Act”), the legislature enacted broad protections for internet service providers. Section 230(c)(1) states:
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.
To fall within this protection, a party must meet three elements:
- The defendant must be a “provider or user” of an “interactive computer service.”
- The cause of action asserted by the plaintiff must treat the defendant as the “publisher or speaker” of the harmful information at issue.
- The information must be “provided by another information content provider,” i.e., the defendant must not be the “information content provider” of the harmful information at issue.
When applying the Communications Decency Act, courts usually focus on the role the internet service provider played. In Ben Ezra, Weinstein & Co. v. America Online, the plaintiff, a publicly-owned computer software manufacturer, sued America Online after it published inaccurate information concerning the plaintiff’s publicly traded stock through its “Quotes & Portfolios” service area12. However, because the original sources of the information published by America Online came from independent third parties, the 10th Circuit held America Online was immune against liability for posting the incorrect stock information.
Reaching a different conclusion, the court in Hy Cite Corp. v. badbusinessbureau.com (RipOff Report/Ed Magedson/XCENTRIC Ventures LLC)13 found the defendant website operator was an “information provider” for which the protections under the Communications Decency Act did not apply. In that instance, the defendant not only published statements authored by third parties but also produced original, defamatory content. As a consequence, the website operator could not hide behind the immunities afforded under the Communications Decency Act.
D. Consumer Review Fairness Act of 2016
Over the past few years, companies have attempted to restrict negative consumer reviews by inserting “gag clauses” in their agreements which threaten legal action and damages. For instance, the Union Street Guest House in Hudson, New York threatened wedding parties with a fine of $500 for every negative Yelp review left by wedding guests14.
To counter this practice, in late 2016, the United States Congress enacted the Consumer Review Fairness Act. This legislation makes a provision of a form contract void if it:
- Prohibits or restricts an individual who is a party to such a contract from engaging in written, oral, or pictorial reviews, or other similar performance assessments or analyses of, including by electronic means, the goods, services, or conduct of a person that is also a party to the contract;
- Imposes penalties or fees against individuals who engage in such communications; or
- Transfers or requires the individual to transfer intellectual property rights in review or feedback content (with the exception of a nonexclusive license to use the content) in any otherwise lawful communications about such person or the goods or services provided by such person.
The legislation excludes an employer-employee or independent contractor contract. Further, while these provisions provide some protection to individuals, the legislation does not impact legal duties of confidentiality or civil actions for defamation.
E. Hassell v. Bird
In September 2016, the California Supreme Court granted review of Hassell v. Bird, triggering the interest of a variety of court watchers15.
Hassell involves a defamation lawsuit filed by a law firm against a former client that posted negative reviews about the firm and its attorneys on Yelp.com. The law firm obtained a default judgment against the former client for $557,919. In addition to money damages, the trial court issued an injunction directing the former client to remove all defamatory content posted on Yelp.com. Moreover, even though Yelp, Inc., was not a party to the lawsuit, the trial court’s injunction also ordered Yelp, Inc., to remove all reviews posted by the former client.
After it was served with the injunction order, Yelp objected and sought to set aside the judgment based upon a lack of due process, First Amendment protections, and the Communications Decency Act.
In its opinion affirming the trial court, the First Appellate District of California held,
[hfmlists][li]Due process did not bar the removal order, despite the lack of notice and hearing to the nonparty website, because the order treated the website as the administrator of a forum used to publish defamatory reviews, not as a publisher;[/li][li]The removal order was not a prior restraint; and[/li][li]The Communications Decency Act did not bar the trial court from issuing the removal order because the order did not impose any liability on the website16.[/li][/hfmlists]
Yelp appealed, and the California Supreme Court is expected to issue its opinion in mid-2017.
CONTROLLING THE MESSAGE (i.e., PREVENTING A FIRE)
The risks companies face come in many shapes and forms. In this world of “hyper-socialization,” risks to a company’s brand can come from internal or external sources. While some risks can be eliminated, others can only be controlled or mitigated.
Most companies will agree the use of social media in the workplace is commonplace. However, without proper controls, a company’s brand can be severely damaged. From the staff member at a zoo in Atlanta who posted a racially charged comment while “on the clock” or the photograph of a fast-food employee who mimicked licking a stack of taco shells in the kitchen, the potential risks to a company’s brand are endless.
When addressing these workplace risks, companies must be cognizant of the National Labor Relations Act (“NLRA”). The general assumption is that a private employer may regulate social media use without restriction. However, a blanket policy prohibiting social media use altogether may violate the NLRA.
Under the NLRA, employees enjoy the right to engage in “concerted activities for the purpose of collective bargaining or other mutual aid or protection.” In other words, the NLRA protects two or more employees who take action for their protection regarding the terms and conditions of employment, even if communicated through social media. For example, the NLRA would protect employees who exchange comments on a Facebook post concerning their wages – even if the remarks are potentially harmful to the employer.
However, an employee’s personal grievances or reckless behavior do not enjoy protected status. The NLRA is meant to protect employees who discuss policies and practices. The more personal the communication, the less likely the social media post will be protected by the NLRA.
Why is this important? Because it is unlawful to retaliate against any employee who participates in protected activity, and the potential penalties for violating the NLRA can add up quickly. If, for instance, an employer discharged the employee who took to Facebook to discuss wages paid by the company, that employer may ultimately be ordered to compensate the employee for lost wages and benefits as well as attorneys’ fees and costs. The employer may also be compelled to reinstate the employee and/or readjust his or her seniority and status17.
So what is a company to do? The following outlines some practical steps companies should consider.
A. Social Media Policy
Companies should implement a NLRA-compliant social media policy. Just as with other policies, the restrictions need to be clear and defined as the presence of ambiguous statements can result in unnecessary liability. For instance, rather than a policy that broadly forbids objectionable statements, craft a policy that precludes social media posts that are “slanderous or detrimental to the company” and provide examples. Another restriction might include requiring an employee to receive prior authorization before posting a message on social media that is in the employer’s name or could reasonably be attributed to the employer18.
An effective policy will also define the company’s culture and mission, individual’s roles and responsibilities regarding social media, and any industry regulations. Security should also be a part of any policy, requiring employees to use complex passwords and implementing appropriate firewalls.
After adopting its social media policy, Coca-Cola published it for public consumption, a copy of which is included at the end of this article.
B. Education and Training
Creating and adopting a social media policy is easy. The hard part comes with implementation. Once the written policy is adopted, it is paramount to communicate the policy to employees and convey a clear understanding as to what social media use is appropriate and permitted. Employees should be educated on best practices, security risks inherent to social media, and how to mitigate risk.
C. Social Media Posting
Nothing should be posted without prior approval. What may appear innocuous to one person could be devastating to a company’s reputation if the brand is not properly reflected. Employees should not have free reign to post anything they want on a company’s social media outlets.
D. Use #Hashtags with Caution
Hashtags are cool. Hashtags are hip. Hashtags can promote your brand and expose your company to millions of people. However, hashtags can also cause a great deal of unnecessary heartburn and negative attention.
In 2012, McDonald’s initiated a Twitter campaign using the hashtag
#McDStories. Rather than generate hundreds of Tweets promoting customers’ experiences at McDonald’s, it provided ammunition for attacks upon the restaurant’s brand:
[hfmlists][li]One time I walked into McDonalds and I could smell Type 2 diabetes floating in the air and I threw up. #McDStories[/li][li]These #McDStories never get old, kinda like a box of McDonald’s 10 piece Chicken McNuggets left in the sun for a week.[/li][li]Ate a McFish and vomited 1 hour later…. The last time I got McDonalds was seriously 18 years ago in college….. #McDStories[/li][li]#McDStories I lost 50lbs in 6 months after I quit working and eating at McDonald’s.[/li][/hfmlists]
McDonald’s paid a promotional fee to Twitter for this privilege. Within two hours, it canceled the campaign. That did not stop Twitter users from continuing to post #McDStories, further attacking the company’s brand19.
E. Monitor Social Activity
Needless to say, companies must vigilantly monitor an ever-increasing number of social media outlets. If a company does not know about an impending crisis, that company will not be able to timely respond. This task requires more than one (or ten) employees. Instead, companies should employ outside companies and applications to monitor, identify and control potentially negative content.
RESPONDING TO SOCIAL MEDIA (i.e., PUTTING OUT A FIRE)
Dealing with a social media crisis demands immediate attention as silence is not an option. “No comment” has limited (if any) use and is often interpreted as an admission of guilt. The consumer public demands more and more transparency from companies.
Once a potential crisis has been discovered, the first place to respond is on the social media platform where the material was first reported. The initial response should be concise and acknowledge the issue. This is not the place to argue or “win.” After the initial response, continue to monitor and respond as needed. Also, suspend all scheduled or pre-programed posts to avoid expanding the crisis unnecessarily.
Another option is to create a new website or email address to provide information and resources dedicated specifically to the current crisis. At the same time, document and preserve all content. This will be necessary should the crisis trigger litigation, but it will also be helpful to evaluate the efficacy of a company’s response20.
SCRUBBING AND ITS PERILS
Like the popular slogan for the Las Vegas Convention and Visitors Authority, what happens on the internet stays on the internet (with a few exceptions). So what is a company to do when a social media firestorm is raging? If you decide to “scrub” the internet, do so cautiously.
In 2011, the University of California Davis (“UCD”) made national headlines when campus police pepper-sprayed student protesters. Overnight, the image of the officer with a can of pepper-spray went viral on YouTube and as a meme depicting the officer in a wide variety of historical and pop-culture settings. Ultimately, UCD determined the pepper spraying non-violent protestors violated its security policy.
In an attempt to improve its image, UCD spent $175,000 to a consultant to “clean up” its online image. This effort backfired, and formed one of the grounds which led to UCD’s chancellor being placed on leave and ultimately resigning21. Even more damaging to UCD is that news of its scrubbing ensured the pepper spray incident would not go away quietly.
Companies face a difficult balancing act in light of the exposure (both good and bad) social media generates. To navigate this ever-changing landscape, companies must dedicate resources to crisis planning, monitoring for potential crises, and preparing to respond quickly in a controlled, transparent manner. Moreover, as courts, states and the federal government continue to address issues surrounding the uses and abuses of social media, it is imperative that companies stay on top of changes in the law.
Authored By ALFA International Attorneys:
Michael R. Gibson HIGGS FLETCHER & MACK, LLP
San Diego, California [email protected]
Rossi F. Maddalena MERRICK, HOFSTEDT & LINDSEY, P.S.
Seattle, Washington [email protected]
1 Alexander F. Brigham and Stefan Linssen, Your Brand Reputational Value Is Irreplaceable. Protect It!, Forbes, February 1, 2010.
2 521 U.S. 844 (1997).
3 Id. at 870.
6 383 U.S. 75 (1966).
7 418 U.S. 323 (1974).
8 Id. at 347.
9 See, California Civil Jury Instructions 1700-1705.
10 See, California Civil Jury Instructions 1720-1722.
11 See, Brown & William Tobacco Corp. v. Jacobson, 827 F.2d 1119, 1139 (7th Cir. 1987); Dun & Bradstreet, Inc. v. Greenmoss Builders, Inc., 472 U.S. 749 (1985).
12 206 F.3d 980, 984-985 (10th Cir. 2000), cert. denied, 531 U.S. 824 (2000).
13 418 F. Supp. 2d 1142 (D. Ariz. 2005).
14 Charlotte Alter, ‘Historic’ Inn Charges $500 Per Negative Online Review, Time, August 4, 2014.
15 247 Cal.App.4th 1336 (1st App Dist. 2016).
16 Id. at 1355-1365.
17 Geoffrey Thorne, Social media in the workplace: tips for employers, The Daily Transcript, December 1, 2016, at p. 3.
19 Kashmir Hill, #McDStories: When A Hashtag Becomes A Bashtag, Forbes, January 24, 2012.
20 Johanna Wilbert, How to respond to a social media crisis, Inside Counsel, January 2016.
21 Hailey Branson-Potts, UC Davis chancellor apologies for Internet scrubbing controversy, Los Angeles Times, April 20, 2016.