Is there any defense against online rants about your company?
The case of a California small business suggests you may not be able to prevent sniping–but you can hit ranters in the pocketbook.
MLogica, a business applications and database software developer, and its president and CEO have won an unusually large $1.56 million award in an Internet defamation case. On top of that, the court issued an injunction prohibiting the defendant from repeating libels against either mLogica or its top executive Amit Okhandiar.
Defendant Pankaj Karan, a doctor and medical director at two companies, was starting a business. So he hired a company in India owned by Okhandiar to create some custom software.
MLogica’s lawyer, Aaron Morris, told the Orange County Register that Okhandiar’s company delivered the software on time, but a dispute arose. In 2008, Karan attacked mLogica, which was not involved with the software, and “stated in one e-mail that he would ‘work night and day to inflict the maximum amount of financial pain’ on mLogica,” according to court papers filed in August 2010.
According to the lawsuit, Karan accused Okhandiar and/or mLogica of never paying vendors on his blog, of “unscrupulous, unethical and illegal business conduct” and of cheating and siphoning money from people with whom they did business. Karan then e-mailed these allegations to mLogica's clients and business partners using a list illegally obtained from the company, court papers allege.
Karan under oath could not identify even one unpaid vendor or defrauded customer, according to an account Morris gave The Register. (In defamation cases, the defendant has the burden of proof.)
The emails caused such damage to mLogica that the company–which has some 50 employees and contractors–lost work and had to lay off employees.
“People stopped returning (mLogica’s) calls; it killed a valuable pipeline leading to big deals,” Morris told The Register. “I told jurors that if someone said their accountant was a crook, they might ignore it because they never had any trouble with him, but they also might not refer him to others because any future problem might make them liable. That’s what’s so damaging about these Internet defamation cases.”
The breakdown of the $1.56 million: $492,000 in past economic damages, $738,000 in future economic losses, $282,000 to Okhandiar for additional and punitive damages and $50,000 to mLogica for loss of reputation. Morris, whose firm frequently represents companies in Internet defamation cases, said mLogica’s award “stands out due to the size of the verdict.”
“The Internet is the wild West,” he said. “It is not a good thing that people create so much falsity that is shot around the world with a few keystrokes. It’s hard to unring the bell.”
On May 11, Karan filed an objection, complaining in part that his writing was free speech protected by the First Amendment. His attorney Randy Catanese told the newspaper that if the judge does not set aside the jury verdict, he’ll appeal the case.
The mLogica case, of course, involved e-mailing clients of allegations, but if you’re wondering how to react to negative reviews or other online writing, one lawyer (not involved in this case) recommends not sending a letter demanding the person remove or retract it.
If you do insist on sending one–and many lawyers will advise against it–attorney Adrianos Facchetti said one of two things will happen: There will be no response, or “the alleged defamer steps up his or her efforts to impugn the business owner’s reputation.”
Nor should you post a comment online. Said Facchetti: “Sounds reasonable, right? Tell your side of the story? Big mistake. What very few people know is that by posting a response you have enhanced the visibility of the negative posting.”
His advice? Consult a lawyer for other legal remedies–and consider a reputation management company.
To listen to a free webinar on protecting yourself from Internet defamation, click here.
How do you handle negative reviews and other visible complaints about your business?
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