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“Like” It or Not: How Social Media Can Lead to Litigation

About two-thirds of the adult population of the United States has a presence on a social networking platform. Over 900 million people worldwide are users of Facebook, and over half visit the site at least once a day. In any given month, over 30 billion separate pieces of content (wall posts, photos, etc.) are uploaded to Facebook, while Twitter processes a staggering 340 million tweets daily from its more than 140 million active users.

From claims investigations and debt collections to employment practices liability and libel claims, social media might get you sued.

Corporate America, too, has jumped on the bandwagon, with companies now constantly touting their social media presence and exhorting consumers to like them on Facebook and follow them on Twitter. In fact, 2012 will mark the first year that corporate spending for online advertising exceeds spending for print advertising.

Claims professionals and risk managers are increasingly seeing the significance of social media in claims investigations and the defense of litigation. As more and more people live their lives online, sites like Facebook, Twitter, YouTube, LinkedIn and MySpace have become a digital treasure trove for incriminating photos and online admissions that undermine a claimant’s case.

Courts across the country have shown a willingness to compel suddenly-shy litigants to turn over content from their social media profiles, especially when the publicly viewable pages contradict the claims made in the lawsuit. Privacy objections are frequently brushed aside, with some judges noting the disconnect between posting material on a site whose fundamental purpose is sharing and then later protesting when the same content is sought in discovery.

In 2010, a New York Supreme Court justice summed up this sentiment well when ordering a product liability plaintiff to turn over content protected by her privacy settings. “When Plaintiff created her Facebook and MySpace accounts, she consented to the fact that her personal information would be shared with others, notwithstanding her privacy settings. Indeed, that is the very nature and purpose of these social networking sites else they would cease to exist.”

Yet even as the claims and risk management field grows accustomed to seeing evidence from social media sites playing a pivotal role in defending claims, what about those uses—or misuses—of social media by insureds that can themselves lead to claims? Social networking’s impact on our culture has also transformed effect on the legal landscape itself, with new causes of action cropping up and online activities by a company or individual in one state sometimes leading to a court in another state asserting jurisdiction.

The ubiquitous nature of social media may also make a difference when an individual is being served with lawsuit papers in the first place. In 2008, an Australian court allowed a mortgage lender, MKM Capital, to serve a default judgment in a foreclosure matter via Facebook as a form of substituted service. All the more-conventional methods of service had proven fruitless, since the defendants had moved, changing both jobs and phone numbers. But using an email address one of the defendants provided in the original loan documents, the lender’s lawyers were able to locate her Facebook page, and since each of the defendants had “friended” the other (and neither had elected to restrict their Facebook pages with privacy settings), the attorneys were able to match up personally identifiable information on the defendant’s Facebook profiles with information disclosed in their loan applications. Reassured that the lender did indeed have the right people, the court ruled that delivery of the suit papers via Facebook would be sufficient notice.

This groundbreaking decision was quickly embraced by courts in Canada, New Zealand, Singapore and the United Kingdom. In 2011, courts in Minnesota and Texas also accepted using social networking sites as a means of substituted service, and the state civil courts website in Utah similarly envisions using sites like Facebook and Twitter as vehicles for service of process.

Besides the possibility of having your insured served via social media, what other surprises does social media have in store for claims and risk management professionals? For starters, one recent case serves as a cautionary tale about the ethical boundaries in using social media as a claims-investigation tool.

In May 2012, an insurance carrier, and the private investigator and defense law firm it had hired, were sued in state court in Cleveland. The lawsuit alleges that the defendants violated state wiretapping and invasion-of-privacy statutes when, during the defense of a dog bite case, the investigator allegedly improperly gained access to the 12-year-old plaintiff’s privacy-restricted Facebook page by “pretexting.” According to the plaintiff’s complaint, the investigator posed as one of the girl’s Facebook friends, enabling him to view her private information and access more than 1,000 posted messages and 220 photos between the plaintiff and her friends. While still ongoing, the case nevertheless raises concerns not only about ethical conduct in claims investigations, but also about the potential for independent liability on the part of a company or insurance carrier.

Of course, other uses of social media can lead to invasion-of-privacy claims as well. As innocent as they may seem, incidents of being “tagged” in a photo on Facebook have led to claims of invasion of privacy and harassment. And for the many among us who have looked at an unflattering photo from a party or family gathering and cringed, at least one person has tried (unsuccessfully) to sue for this online embarrassment. Courts encountering such claims have usually thrown them out.

However, when more-nefarious motives lead to truly invasive photos being posted (such as the bitter ex-boyfriend who posted sexually explicit photos of his ex from happier times and even sent them as Christmas greeting cards to her friends and family), courts show no such reluctance. In some cases criminal charges have been filed. A number of states, including California and Texas, have passed “e-personation” laws, which criminalizes conduct, such as impersonating someone else online or creating a fake social networking profile for the purposes of, for example, identity theft or harassment.

There are also risk management concerns unique to certain professions. While the debt collection industry has been quick to embrace the use of social media as a lawful means of tracking down financial clues about debtors, consumer protection laws like the Fair Debt Collection Practices Act do set limits on communicating with debtors and third parties.

In a lawsuit in Florida, debt collection firm Mark One Financial was ordered to cease all contact via social media after its collectors allegedly improperly contacted a debtor’s cousin and sister on Facebook and reportedly used made-up names and harassed the debtor herself. In a federal court case in Minnesota, another debt collection agency was sued for not only looking up the plaintiff’s MySpace page, but communicating with her on the site in a harassing manner. The debt collector’s “investigator” allegedly made comments about posted photos of the debtor’s daughter and how terrible it would be for the child to see mommy being taken away by the sheriff for not paying her car note.

The legal profession itself is not immune to the risks posed by social media, and risk managers and those handling professional liability claims need to be aware of this. Noting that “technology has irrevocably changed and continues to alter the practice of law in fundamental ways,” the American Bar Association’s “Ethics 20/20 Commission” has approved of certain changes in the “Model Rules of Professional Conduct.”

One of these changes is to Rule 1.1, which requires a lawyer to provide competent representation. The new version of the rule would require attorneys to not only stay abreast of changes in the law and its practice, but also to stay current on “the benefits and risks associated with technology.” This development is part of a nationwide move toward requiring attorneys to be conversant in the use of social networking platforms.

In 2011, a Maryland appellate court considering evidence from social media sources quoted approvingly that “as a matter of professional competence,” lawyers should be investigating social media avenues in their cases. A 2010 Missouri Supreme Court case, Johnson v. McCullough, even imposed an affirmative duty on attorneys to make online investigation a key part of their jury selection process. Other courts have required lawyers to make use of online resources as part of exercising due diligence.

In an age in which locating and using content from social networking sites is playing an increasingly important role in a broad range of practice areas (one 2010 study by the American Academy of Matrimonial Lawyers revealed that 81% of respondents had used social media evidence in their cases), claims can easily arise from lawyers’ failure to use these resources in a professionally responsible way. Ethics opinions from several bar associations, including Philadelphia, New York and San Diego, have addressed lawyers’ “friending” of potential witnesses. Failing to properly preserve such evidence can also be a malpractice trap for attorneys.

In a Virginia wrongful death case, a $10.6 million verdict was reduced when it was found that the plaintiffs lawyer had instructed his client to delete damaging photos from his Facebook page, and that he had also represented that his client did not have an active Facebook account. Besides slashing the verdict in half, the court levied sanctions of $722,000 against plaintiff’s counsel and his client for spoliation of evidence. Episodes like this demonstrate that misusing or not knowing how to properly use social media can lead to claims against attorneys.

Another area of concern for risk managers and claims professionals is the employment arena. With people spending more and more of their time on sites like Facebook, social networking sites are becoming digital watercoolers. As a result, companies must be more vigilant than ever about their employees’ online activities. Wall posts on Facebook and tweets on Twitter have led to claims of workplace harassment, discrimination and bullying. In addition, workers sharing too much online could reveal trade secrets or proprietary information, not to mention damage the company’s brand and goodwill by bad-mouthing their employer or its customers. “Facebook firings” of employees for their online misconduct have become almost commonplace. Virgin Atlantic Airlines, for example, fired 13 cabin crew members after they made candid comments on Facebook about the airline, its passengers and its planes.

Yet even such terminations can lead to claims. In a 2009 New Jersey case, Pietrylo v. Hillstone Restaurant Group, two employees at a Houston’s Restaurant successfully sued after their employer improperly obtained access to a password-protected social media page where the employees had posted negative comments about the restaurant and certain supervisors. After being fired, the former employees brought claims of invasion of privacy and violation of applicable wiretapping laws.

The National Labor Relations Board (NLRB) has taken a number of employers around the country to task for similar “Facebook firings,” maintaining that many such firings, or the social media policies used to justify them, actually violate employees’ rights to engage in protected “concerted activity” like discussing workplace conditions. The NLRB’s aggressive stance underscores the need for risk management professionals and general counsel to adopt a well-drafted social media policy that complies with applicable law.

The workplace is indeed rife with potential claims that were unheard of before the advent of social media. While an estimated 93% of recruiters and human resources professionals report searching social media as a routine part of pre-employment screening, even this can lead to claims. Possessing too much information about an unsuccessful applicant can be dangerous. Viewing a Facebook page that shares information about a job candidate that would be off limits in an interview—say, information about a disability, sexual orientation, religion or a pregnancy—could give rise to a colorable claim of discrimination by a disgruntled applicant.

In some instances, over-reaching for information can expose an employer. Earlier this year, employers in several states made news because of their policies requiring job applicants to turn over their social media usernames and password information. A backlash quickly ensued, and several states (like Maryland and California) passed or considered legislation banning employers from seeking such information.

And even the issue of who owns a social media account has led to litigation, as former employees who were entrusted with cultivating a company’s social media presence left for a competitor, but took their Twitter followers and Facebook fans with them. One ongoing federal court case in California, Phonedog LLC v. Kravitz, may help clarify what companies need to do to protect themselves in such situations.

A final area of potential claims that can spring from social media use can be found in the “advertising injury” portion of a comprehensive general liability (CGL) policy, often a routine part of a company’s insurance coverage. Activities or statements on social media platforms like Facebook or Twitter can—and have—led to claims of defamation, business disparagement, trademark infringement and copyright infringement.

While posting content or logos that infringe on the intellectual property rights of another is easy to envision, can you really libel someone in 140 characters or less on Twitter? There have been such “Twitter defamation” suits around the country. Rocker Courtney Love settled one such lawsuit brought by an Austin-based fashion designer for several hundred thousand dollars. Unhappy with the outcome, she took to Twitter again to criticize her (now former) attorneys; as a result, Love is now a defendant in another “libel by Twitter” lawsuit, this time brought by her former lawyers. Another case was filed in Minnesota by an NBA referee arguing that the tweets of an Associated Press sports reporter, who accused the official of making calls favoring a particular team, were libelous.

Social media is here to stay, and it represents a paradigm shift in how people communicate and share information. While this digital age has given risk management and claims professionals a treasure trove of information to be mined in defending all kinds of cases, it is also proving to be a breeding ground for claims and causes of action that were unimaginable only a few years ago.

John G. Browning is founding partner of the Dallas office of Lewis Brisbois Bisgaard & Smith, author of“The Lawyer’s Guide to Social Networking” and a law professor on legal issues related to social media.

Risk Management Magazine and Risk Management Monitor. Copyright 2022 Risk and Insurance Management Society, Inc. All rights reserved.National Law Review, Volume II, Number 302

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