Companies of every size are concerned with protecting the reputation of the company, which is often a company’s greatest source of referrals. Protecting the online reputation of a company has become increasingly difficult because the reputation of a company can be ruined very quickly if an unhappy customer, former employee, or competitor of the company decides to broadcast complaints and potentially defamatory information either anonymously or on personal pages.

It  has also become increasingly important for a company to monitor and protect its online reputation because consumers have become increasingly reliant on online review websites, such as Yelp, and social media websites in making purchasing decisions. In addition to internal public relations departments dealing with these types of social media reputational issues, companies may also have a legal recourse against those who defame them. Companies typically must seek relief from the individuals themselves, and not the providers of online services including online review websites and other social media, because the providers are generally immune from liability for content created independently by third-party users under Section 230 of the Communications Decency Act. See 47 U.S.C. § 230(c).

Recently, a number of companies have fought back against damage to their reputations via social media by bringing defamation suits against those who are posting defamatory content on social media pages. One recent example is a Massachusetts social media defamation case, Clay Corporation v. Colter, in which a car dealership obtained a $700,000 pre-judgment attachment when it won a defamation action against a former employee’s brothers. Clay Corporation v. Colter, Civ. No. 012-01138 (Mass. Super. Ct. September 10, 2012).

In Clay, the court found that the car dealership terminated an employee with cancer for having inappropriate relations with employees and customers. The employee’s manager had been aware of the employee’s cancer when she was hired and had accommodated her illness throughout her employment. After the employee was terminated, her brothers began an “aggressive” social media campaign, both on Facebook and an additional website. On these sites, the brothers requested individuals boycott the car dealership because the dealership had a history of discriminating against individuals with cancer and had terminated their sister, without cause, because she had cancer. Clay Corporation v. Colter, No. 2012-J-0350 (Mass. App. Div. December 7, 2012).

The car dealership subsequently filed a complaint against the brothers alleging that they had maliciously published defamatory statements and intentionally interfered with the dealership’s advantageous relations with current and prospective customers by posting the defamatory content on their Facebook pages and website. The dealership sought a $1.5 million attachment and a permanent injunction to stop the brothers from publishing any additional defamatory statements about the company.

Due to concerns of restricting the brothers’ First Amendment rights, the court refused to grant an injunction, explaining that “even allegedly false and defamatory statements are protected from prior injunctive restraint by the First Amendment” and the state’s constitution. The court did find for the car dealership and granted the company monetary relief. The court found that the brothers’ statements had no evidentiary or factual support and had “severely and adversely” impacted the dealership’s business. The Massachusetts Court of Appeals upheld the trial court’s decision, but reduced the attachment from $1.5 million to $700,000 because of the speculative nature of the damage to the business.

As consumers continue to consult online reviews and company’s social media sites, and individuals continue to have the ability to post defamatory content on these sites, it will become increasingly important that companies monitor and protect their online reputations. In addition to internal corporate strategies and policies for dealing with individuals posting negative content to a company’s social media page, companies may be able to bring a defamation action or other claim against the individual, depending on whether they can meet the requirements under the particular state’s laws. As companies are increasingly affected by their online reputations, these cases will likely continue to increase in the courts, bringing about more development and certainty in the law.

Shelby Knutson ( / +1 612 321 2207) is an associate in Fulbright’s Intellectual Property Practice Group.