1. Ties that Bind,
Tweets that Defame
Defamation liability risk has increased exponentially
in this brave new world of social media.
Brian Many of us have realized, with the blood drain- applications. It is available on your phone in
Rosenbaum ing from our faces (notwithstanding a quick- your pocket or purse when, say, you have had
Director of the ened heartbeat), that the ‘undo’ button does a few too many cocktails. You can hardly find
Financial Services not work after the ‘send’ or ‘post’ button has a product online that does not have consumer
Group, been pressed. Many of us have written things reviews attached to it.
(Legal Research
and Practice)
and quickly sent them into cyberspace, only to One consequence is a remarkable increase in
Aon Reed spend a long time afterwards wishing we could the opportunity to defame others, and to do
Stenhouse Inc. take those things back because, on even a bit so instantaneously to the entire world, perma-
of reflection, the comments were inappropri- nently. Defamation liability risk has increased
ate, harsh, etc. Anecdotally, it seems people gen- exponentially in this brave new world. The
Michael C. erally do not put as much consideration into magnitude and prevalence of that risk may not
Smith what and how they write in email and social be fully appreciated by insurers and insureds
Partner, media tools as they do with conventional forms alike because, we suspect, many cases consider-
Borden Ladner of communication. Perhaps this is due to the ing these issues are being settled before courts
Gervais LLP immediacy of the medium and the lack of in- consider them and report their decisions. There
herent opportunity for sober second thought is still a dearth of reported cases and guidance
prior to publication. from the courts today. But only a few high-pro-
The use of social media is commonplace and file judgments, settlements or class actions are
growing. It is now interwoven with most online required to increase that consciousness. Victims
52 Canadian Underwriter August 2011

2. of online defamation will become in cyberspace. For example, are Internet briefly at the coverage provided by
aware of their rights, increasing claims service providers “publishers” and liable common types of liability policies and
volume. Businesses and individuals will simply because defamatory comments the coverage issues that may be raised.
start asking for protection, if they are pass over their servers for publication?
not already. Brokers need to develop What about a blog host? What about homeowneR’s Policy
an understanding of the risk/coverage the employer from whose laptop and If the communication is made in the
equation in this space if they do not al- servers an employee sent a defamatory social networker’s individual capacity,
ready have it. Opportunities likely exist statement? What about someone who then his or her homeowner’s policy
for insurers to introduce new products hyperlinks to or passes on the address could provide some coverage for de-
offering appropriate coverage to the to a defamatory Web site? (A decision fense costs and judgments/settlements
various classes of insureds they service arising out of a defamation action.
— from the family with social media- However, a number of provisions in
crazed teenagers in the house to large the typical homeowner’s policy could
multi-national corporations. preclude coverage.
In order for the personal liability
The Risk coverage to trigger in a homeowner’s
The tort of defamation protects a per- policy, a “bodily injury” must result
son’s reputation from false statements. from an “occurrence.” An occurrence
Libel (written words and broadcasts) is generally defined as an accident.
and slander (spoken words) are sub- Many U.S. and Canadian courts have
sets of defamation. A statement is de- determined the intentional posting of
famatory if it lowers the subject’s repu- defamatory or offensive messages is
tation. The relative ease with which at not accidental in nature and therefore
least prima facie liability for defamation would not qualify as an occurrence.
can be established is not widely ap- Recently, however, a number of courts
preciated. The only thing the victim of have ruled the intentional posting of
defamation has to prove to establish li- defamatory remarks can constitute an
ability is that the defendant published is currently pending from the Supreme occurrence if the effects of such a post-
a statement — in the sense that a third Court of Canada on this point.) What ing were unintentional and accidental.
party heard or read the statement — about a travel review Web site that Assuming the occurrence require-
concerning the victim that, in its lit- contains defamatory reviews? ment is met, a bodily injury must still
eral meaning or by innuendo, had a Until we have more definitive an- result from the defamatory statements.
tendency to lower the reputation of swers to these questions, and as long as Certainly if a plaintiff alleges a physical
the victim. Then the onus shifts to the de- there remains an omnipresent desire to injury, such as a heart attack, such an al-
fendant to prove the elements of one of find “deep pockets” to pay for the court legation would constitute bodily injury
the defences to the tort [e.g. justifica- awards or the costs of the litigation, we under the policy definition. However,
tion (truth), fair comment (opinion), will see victims including anyone who many courts have ruled that mental an-
qualified privilege or responsible could potentially be a “publisher” as a guish alone, the most common allega-
communication on matters of public defendant in their lawsuits. Employers tion in defamation actions, would not
interest]. The defendant’s intention is will likely be implicated in lawsuits meet the bodily injury requirement.
largely irrelevant. Liability can be es- stemming from an employee’s defama- Even if the occurrence and bodily
tablished even if the defendant did not tory postings from work assets. injury requirements have been satisfied,
intend to defame the victim. Liability is Damages for defamation are not a number of exclusions might preclude
determined based on the words used subject to the “cap” on general dam- coverage. The expected or intended
and the fact of publication. ages for pain and suffering (currently injury exclusion would eliminate
Any repetition of defamatory around $345,000). The damages are coverage if the social networker’s
statements makes the person repeating “at large.” Some awards have exceeded defamatory posts could be considered
them liable as a publisher just as if they $1 million. The courts have recognized as intentional or made with an
had made the statements originally. the reach and permanency of Internet expectation to injure someone. Further,
This is where the law needs to catch defamation and have signaled that dam- the business exclusion would preclude
up with the Internet Age and provide age awards will be higher as a result. coverage if the defamatory remarks
guidance as to whom is a “publisher” With the risk outlined, let’s look resulted in bodily injury arising out
54 Canadian Underwriter August 2011

3. Any repetition of defamatory statements makes the person repeating them
liable as a publisher just as if they had made the statements originally.
This is where the law needs to catch up with the internet Age and provide
guidance as to whom is a “publisher” in cyberspace.
of or in connection with a business coverage B caused with the knowledge that the
conducted from an insured location or Coverage B deals with personal and act would violate the rights of another
engaged in by an insured, irrespective advertising injury. It is considerably and would inflict personal injury.
of the ownership of said business. broader than Coverage A, in that there Recovery could also be eliminated if
Other fact-specific exclusions in the is no bodily injury or occurrence the personal injury arises out of an
typical homeowner’s policy could requirement to trigger coverage. electronic chatroom or bulletin board
also limit or preclude coverage. However, in order to access the policy, the insured hosts, owns or over which
It should be noted some insurers the personal injury must arise out of the insured exercises control.
can provide defamation coverage that a specifically defined wrongful act that
is not conditional upon establishing might include the posting of libelous mediA liABiliTy Policy
bodily injury. statements or remarks violating Other insurance policies might provide
another’s privacy. slivers of coverage for defamation in the
commeRciAl GeneRAl social media arena. However, the most
liABiliTy Policy robust coverage available for this risk is
A Commercial General Liability A cGl policy can contained in a media liability policy. This
policy (CGL) is designed to pro- potentially provide insurance is specifically designed to protect
vide general liability coverage to
business entities. It can potentially
coverage for defence businesses and their employees against
claims arising out of the communication
provide coverage for defense costs costs/settlements of information and would include
and settlements/judgments result-
ing from an employee’s defamatory
from an employee’s broad defamation coverage. Companies
and their employees use social media
statements, but only if the remarks defamatory statements, for a whole host of purposes and not
were made in the scope of employ- but only if the remarks all media liability policies are created
ment. Two standard coverages under equal, so it is important to review the
a CGL policy come into play when were made in the scope policy definitions, terms, conditions and
considering defamation. of employment. exclusions with an insurance specialist in
this area. Of particular importance is the
coverage A Also, a number of specific exclusions definition of covered media. To a large
Coverage A deals with bodily injury can limit or eliminate recovery. If degree, this will determine the breadth of
and property damage. It is very simi- a statement is published with the coverage. However, since media liability
lar to the homeowner’s policy, so the knowledge that it is false, coverage may insurance is specifically crafted to cover
above analysis is applicable in deter- be precluded. In addition, defamation defamation, there are fewer obstacles to
mining coverage limitations. Bear in allegations are often coupled with recovery than those in homeowner’s and
mind that many CGL policies contain invasion of privacy allegations. This CGL policies.
a personal and advertising injury ex- can create coverage difficulties under Stay tuned (or logged on). If, as we
clusion pertaining solely to Coverage Coverage B due to an exclusion for predict, defamation claims volume
A that forces any claims of bodily knowingly violating another’s rights. increases as social media users gain rights
injury arising out of personal injury This provision would preclude awareness, so to will come an increase in
into Coverage B. coverage when the personal injury was coverage demands and coverage issues.
56 Canadian Underwriter August 2011