Companies—especially those based outside the U.S.—sometimes ask why it is so difficult to bring a lawsuit based on something posted on social media. A recent federal court case from California can help show how courts view these actions. Prehired, LLC, v. Provins, No. 2:22-cv-00384-TLN-AC (E.D. Cal. April 12, 2022) (2022 WL 1093237).
Facts
The matter began in 2020 when the plaintiff, which advertised its training services on social media, entered into an agreement with the defendant. The defendant completed the course, without complaint. The parties then entered into an agreement for the defendant to assist plaintiff with marketing its business and training, but the defendant terminated that agreement three months later. Then, according to the complaint, the defendant began posting statements on social media, including that the plaintiff “leaves its customers in debt, Plaintiff sues its customers, Plaintiff is consumed by greed, and Plaintiff is filled with “gaslighting, [ ] false advertising and ethical issues.” As a result, the plaintiff claimed that customers cancelled sales meetings and also cancelled signed contracts, including a $20,000 contract.
The plaintiff filed a lawsuit in federal court, claiming trade libel (a form of defamation) and intentional interference with business relationships. Even before trial, the plaintiff asked the court to prohibit the defendant from continuing to publish false and defamatory statements while competing against plaintiff. The court denied the plaintiff’s motion for a temporary restraining order (TRO).
The Ruling
The court began by pointing out that preliminary relief is an “extraordinary remedy” that should only be granted if the plaintiff can make a “clear showing” that it is entitled to the relief. The plaintiff would need to “establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.””
Because the First Amendment to the U.S. Constitution protects free speech, courts are reluctant to prohibit statements (speech) absent proof that the statements are false, misleading, etc. In this case, the plaintiff had not provided any evidence that the statements were false, but simply asserted that the statements were false. The court stated ““[w]here there has been no trial and no determination on the merits that there is actionable defamation, … the court cannot prohibit a party from making statements characterized only as ‘false and defamatory.’” Therefore, the plaintiff had not shown a likelihood of success on the merits. In short, “Plaintiff has not persuaded the Court that the issuance of a temporary restraining order would not constitute an unconstitutional prior restraint.”
Takeaways
Note that the court refused this request for pre-trial relief, but the plaintiff still can proceed to trial. The court noted in the opinion that some of the defendant’s statements were “what could be provably false assertions of fact.” If the plaintiff were to prevail at trial, and demonstrate that at least some of the statements were false, the plaintiff would request that the court not only enjoin the defendant from making false statements in the future, but also award monetary damages to the plaintiff for the proven harmful effects for the past false statements.
