While we hear many stories in the media about famous people bringing defamation suits to protect their reputations, a lot less is said about companies taking action against potentially defamatory public statements against them.
The main reason for this difference is that legislation currently prevents companies which employ more than 10 people from bringing defamation claims. No doubt legislators were trying to prevent a situation where legitimate consumer complaints might otherwise be silenced by big business, but what about situations where an SME has had their reputation unfairly tarnished by a public statement? We get many enquiries from businesses frustrated by adverse Google ratings and criticisms on Facebook, where what is being said about them is scandalous, and where they feel powerless to take effective action. What are their options?
The good news is that there is currently an alternative legal avenue to protect companies under what is called, “the tort of injurious falsehood”. Four elements must be proven in court to win these claims. First, there must be a false statement made against the company’s goods or business. Second, that statement needs to have been made to a third party (not just be in discussion between the company and the customer). Third, the statement needs to have been made maliciously or with reckless indifference to the damage it might do. Lastly, the company will need to be able to show the likelihood of actual damage being caused by the statement.
Of course, few of these disputes end up going all of the way to a contested hearing. In most cases, a well-crafted letter of demand from the company’s lawyers, on threat of litigation, can quickly change the tide.
Companies should also be aware that the court can grant urgent interlocutory injunctions in these cases, which means that the critical content can be removed on an urgent basis (and indeed this may be necessary to reduce the commercial damage).
Sometimes companies are reticent to bring these claims on the basis that the person making the damaging remarks have no finances to meet an adverse court order. Bear in mind, however, that in circumstances where a host such as Facebook or Google is put on notice that a damaging statement has been made using their service, but that host chooses not to remove the comment, the host may itself be held liable. For that reason, companies should also send a demand to the host to remove the comment, on threat of potential legal action. Not only is this likely to result in the removal of the offending on-line comment, but it sets the company up potentially to take action against the host as an alternative defendant with deeper pockets.
Atkinson Vinden has a growing Reputation Management practice, which incorporates Defamation and Injurious Falsehood claims. Call our managing partner Rod Berry if you need confidential guidance in this important area.