Social enterprise, blogging and the threat of defamation lawsuits

Crooke himself points to the answer when he observes that "same defamation, slander and libel laws that apply to the New York Times apply to your blog."  He's right--and those same laws make it rather difficult for a plaintiff--especially a public figure such as Crooke or Convio--to prevail.

The landmark case here is New York Times v. Sullivan, a U.S. Supreme Court ruling that protects public figures from defamation claims unless the statements in question were made with actual malice (i.e., with knowledge that they were false or in reckless disregard of their truth or falsity).  The reason for this legal principle is the First Amendment; if a plaintiff could win defamation claims simply for negative or inaccurate assessments, freedom of speech would soon become meaningless.

Consider the Convio example.  Here we have a company that is in the public marketplace, has been involved in transactions with a significant public interest, has been the subject of multiple reports in the mainstream media and blogs, and has filed to sell stocks to the public.  David Crooke is a founder of the company, the news of his departure was reported in a press release, Crooke has addressed the media on several occasions and, in the present instance, has engaged in the newsworthy action of being "generous" enough to "offer" to a member of the media to avoid a lawsuit in exchange for withdrawing the post and making a public apology. 

From a legal perspective, is a court likely to find that Allan's statement falls within the standard of actual malice?  The context strongly suggests that a court would conclude the answer is no.  Contrary to what Crooke's implies, the law does not impose a due-diligence-like duty to investigate, nor does it require us to accept the word of the person involved as to what actually happened.  In this specific instance, Allan assessed a press release in light of previous events and prevailing practice in writing corporate press releases. 

Imagine if statements such as these weren't protected by the First Amendment.  Were business reporters required to retract and apologize every time they tried to assess available evidence, the only viable statements in the media would be bland regurgitations of corporate press releases.  Customers aren't the only only ones who stand to benefit from open discussion of corporate activity.  Vigorous, daring and contrarian analysis is particularly important when a company, like Convio, is poised to sell its stock to the general public.  Without knowledgeable observers reading the tea leaves of official corporate documents, the public would be deprived of the information it needs to determine a fair price to pay for the shares.

Again, I'm not offering legal advice--I'm not a member of the Texas Bar, am not saying a lick about Texas law and will not offer an opinion as to what Crooke or Allan should do.  What I will do is offer a few general points in light of the Crooke & Convio case study. 

First, if you're a nonprofit or social enterprise blogger and receive a cease-and-desist letter, don't panic.  The Electronic Frontier Foundation, the ACLU and a number of law school clinics are out there working to protect you from over-reaching threats of litigation.  Whether your particular threat is over-reaching will depend on the specific facts, so to protect yourself before a letter reaches your door you may want to review the guides I mentioned earlier to help you frame what you write.

With respect to your blog posts, remember that reasoned analysis can be a potent defense to defamation claims.  For example, note what Allan didn't say--he didn't simply assert that he knew for a fact that Crooke had been canned.  He noted the relevant data and extrapolated from it in a way consistent with mainstream patterns of reasoning.  Doing this may not make you immune from C&D letters--obviously--but it does provide a hook for a court to rule in your favor.  It also makes your case much much sympathetic in the eyes of potential allies among the media, civic groups and legal profession.

Whether you withdraw a C&D-ed post or let it stand is going to have to be your call.  On the one hand, it's an easy way to avoid a potentially nasty situation; lawsuits can be expensive even if you win; and the stress can be unbearable.  You might even have a crisis of conscience about making somewhat look or feel bad, a feeling that, like tolerance for risk, affects each of us in different ways.  At the same time, allowing threats to strip your blog of what is arguably its value-added can cost you your audience, not to mention your joy in running it.  It can also betray your own principles about speaking truth to power, starting a cascade of compromises under pressure that cause you to lose any pretense of a moral anchor.

If you're someone who wants to send out a C&D, be careful.  Frivolous lawsuits can damage your reputation far more than most statements to which you object.  This is particularly true when the lawsuit or C&D involves a statement made on the internet, which has been demonstrably efficient in identifying and isolating people who use C&Ds to curb legitimate speech.  Yes, I know that a measured reserve means that there may be things said about you left online that you don't like, but really, the only way to avoid that is to live a life of no consequence.

In this regard, a related concern is the potential that your effort to protect yourself could actually exacerbate the impression created by the statements to which you object.  Consider Crooke's insinuation that Convio's lawyers were monitoring Allan's blog and might take action if he does not withdraw the post.  This is rather unusual; companies don't often sue a member of the media for a negative statement made about an ex-employee, particularly when the offending statement implies that the company was taking corrective action after a security breach that could have a negative impact on its eventual stock price  However, one situation in which the company's lawyers might feel it necessary to take action--and I'm not saying this as a fact, just as an inference an outside corporate analyst might draw--would be if the employee's severance was accomplished through a legal settlement in which the departure announcement was part of the deal.  Again, were I a corporate research analyst in this situation, I'd be asking Convio some hard and pointed questions.

Which brings me to the larger issue of how an organization--nonprofit or for-profit--should deal with an (ex-) employee or Board member who implicates it in a personal C&D claim.  Were I a lawyer connected to Convio, for example, I'd be seriously concerned about an ex-employee threatening a lawsuit related to the circumstances of his departure.  Should Crooke sue, it would open Convio up to discovery related to any of the issues implicated in Allan's post.  In other words Allan could file a legal motion for all corporate records and emails related to the security scandal, Crooke's filing and even the IPO--internal documents that could end up on the internet as part of the official case record.  If this is the sort of thing your company wants, then hey, no problem--let a thousand lawsuits bloom.  But if your organization wants to manage its public image in a more nuanced way, it may want to consider a strategic plan for dealing with personal actions that could provoke a corporate fishing expedition.

Beyond the forced release of internal documents, there are also concerns for the organization's public reputation.  Again, the Convio example--Convio has filed for an IPO, and, if Crooke is accurate, for it to be looking to squelch public analysis of its press releases would be an item of interest to the SEC and investors.  At the very least, were I working as underwriter's counsel, I'd be drawing up a paragraph on this for the Risk Factors section of the Prospectus.  A similar concern applies to nonprofits--if you're sending C&Ds to online critics, don't be surprised if it draws negative attention from nonprofit watchdogs, the Attorney General and the IRS.  It can be interpreted as evidence that you have something to hide.

Again, and I want to emphasize this, I'm not saying anything about the specific circumstances of Crooke's departure--the press release indicates he's gone off to start a new venture, and mazel tov.  I really do wish him all the best.  Nonetheless, were he to file a lawsuit in response to Allan's post, this is one professor who would join the ranks of other legal experts willing to testify that such analysis is protected speech.