Cybersmear may be coming to a Website near you: a primer for corporate victims; how to respond or combat venomous comments from current or former disgruntled employees presents both legal and non-legal problems.

• Author: Ciarlone, Jr., Thomas G.

SAMUEL Taylor Coleridge wrote, "Whispering tongues can poison truth." The Internet is no exception to this simple maxim. With one of three Americans logging onto it daily, and at least 350 million users worldwide by 2003, the Internet has the potential to become the electronic rumor mill for the new millennium. (1)

Much of the time, online gossip is merely scurrilous and perhaps embarrassing. For example, corporate executives and their alleged sexual proclivities are favorite topics for online badmouths. (2) Sometimes, however, boorish banter gives way to injurious falsehood. Consider the story of popular cookie manufacturer Mrs. Fields. In 1996, speeding along the information superhighway was speculation that the company planned to donate pounds of cookies, brownies and other sweets to an O.J. Simpson victory party. Despite its facial implausibility, this myth inspired rumblings of a national boycott. Mrs. Fields was unable to expose the hoax until it retained a public relations firm at great expense. (3)

Then there is Varian Medical Systems, a publicly traded, Fortune 500 company with a market capitalization in the billions. Disgruntled former employees posted more than 14,000 messages--on hundreds of websites--accusing the company and its management of everything from homophobia to pregnancy discrimination to the surreptitious videotaping of public bathrooms. When Varian sued them for defamation, the defendants turned around and created their own web site. Varian prevailed on the merits after a protracted trial. (4) But as a practical matter, it may have won the battle but lost the war. It incurred substantial legal fees and generated negative publicity, but it has yet to silence the defendants, who continue to lambaste the company on their home page. The victory was bittersweet and more or less pyrrhic. (5)

As a general proposition, civil libertarians would applaud this result. These activists insist that the typical action to suppress online discourse is frivolous. It serves only to harass, they say, and often offends constitutional rights, including those to privacy and free speech. (6)

Taken to its extreme, this rhetoric brings David and Goliath into the digital age: Corporations dig deep into their pockets to pay for lawyers whose tactics aim to intimidate and ultimately muzzle computer-savvy but underfinanced critics. (7) Whatever facial appeal it may have, such hyperbole cannot withstand closer scrutiny. To urge that corporate America seeks only retribution when it pursues scandalmongers is to ignore certain economic realities and policy concerns.

When broadcast over the Internet, defamatory speech sometimes causes substantial monetary losses, especially for publicly traded companies. Stock prices can fluctuate wildly; their movement is a function of information or, as the case may be, misinformation. Cyberlibel can manifest itself not only as personal potshots that bruise egos, but also as institutional slurs that move markets. Companies that try to curb the dissemination of misinformation are improperly cast as corporate bullies. Quite the contrary. These companies are honoring their obligation to shareholders to attend to matters that jeopardize reputation, brand name, and thus profitability. (8)

Unbridled innuendo has broader, systemically corrosive consequences to society. It compromises meaningful dialogue. Cloaked in anonymity and unencumbered by editorial filters, almost anyone with a computer can take to the Internet and share their convictions with the world at large. This has the cumulative effect of generating massive amounts of conflicting information, the credibility of which is frequently beyond evaluation. The online marketplace of ideas becomes increasingly incoherent and in the final analysis struggles to fulfill what should be its central role: an arena in which competing ideas collide, but out of which the truth eventually emerges.

What are the theories of liability that corporate plaintiffs may enlist to combat cybersmear campaigns? What are the pros and cons of bringing suit? What are the alternatives to litigation? What preventive measures are there to reduce both the incidence and the impact of digital defamation?

THEORIES OF LIABILITY

While purveyors of fibbery are sued time and again for defamation, other causes of action can lie against them. Depending on the facts, they might be prosecuted for, among other things, violating securities laws, breaching contracts, or diluting intellectual property. In any event, affected businesses should appreciate that their options are not necessarily limited to classic theories of defamation.

1. Defamation

   1. Libel or Slander

      There is a dearth of precedent as to whether electronic communications are subject to the roles of libel, on the one hand, or of slander, on the other. Doctrinally, this issue turns--obviously enough--on whether such communications are more analogous to the printed or the spoken word.

      The same issue confronted the legal community when radio and television first became popular. Initially, when broadcasters read from scripts, libel provided the rule of law, but when they spoke extemporaneously, slander principles applied. (9) Over time, courts "recognized the breadth of exposure and resulting damage from broadcast defamation was akin to published defamation, and began to apply libel standards to broadcast defamation." (10) Today television stations are considered publishers of libelous material, with limited exceptions to this rule, (11) notwithstanding any absence of a script. (12) To the extent that the Internet is susceptible to classification, it has evolved into an interactive blend of print and broadcast media. (13) Courts should be expected to invoke libel, as opposed to slander, in online defamation cases. (14)

      This observation is hardly just an academic one. It has practical and, for that matter, positive ramifications for corporate victims of cybersmear. At common law, a prima facie case of slander requires a greater quantum of proof. In particular, the slander plaintiff must demonstrate that which the libel plaintiff need not: special damages, as distinguished from actual or general damages, or, stated differently, actual pecuniary harm. (15)

      In a libel action, that is to say, plaintiffs must establish only injury to reputation; they need not go a step further and prove resultant economic damages. The underlying rationale is that the relative permanence of the written word raises a presumption of harm, whereas the ephemeral qualities of speech cannot occasion a similar inference.

      Modern jurisprudence, however, is in some instances collapsing the distinction between libel and slander. As a result, some states--most notably, New York--have begun to require proof of special damages even when libel is the theory on which suit has been brought. (16)

      Legal philosophy aside, the bottom line is clear: if cast in the role of defamation plaintiff, a corporation, whenever possible, should proceed under a theory of libel rather than slander. While in the final analysis the former may prove only marginally easier to maintain, common sense alone dictates that no advantage go unexploited.

   2. Libel Defenses

      Even though special damages are often not a prerequisite to recovery, libel remains a notoriously difficult cause of action to prosecute successfully, (17) not because of a high prima facie hurdle, but because of a panoply of privileges and affirmative defenses that do not lend themselves to refutation. (18) Figuring most prominently among them is, of course, the First Amendment.

      1. Constitutional Privileges

      (i) Opinion

      Opinions are tantamount to ideas, the policing of which is rightly the province of neither judges nor juries. Opinions are often not actionable under a theory of libel, (19) but the U.S. Supreme Court has stressed that its decisions have stopped short of carving out a wholesale defamation exemption for "opinion." (20) Indeed, to the extent it serves as a defense to libel, opinion is narrowly defined and reaches only statements that cannot be proved false or that cannot be reasonably interpreted as stating actual facts about an individual. (21)

      Because of this closely circumscribed definition, accused libelists cannot escape liability by qualifying their defamatory utterances with the caveat that they were merely expressing opinions, rather than statements of fact. Accepting such superficial assurances at face value would elevate form over substance in an flourish of naivete. (22) As the First Circuit has put it, "to say `I think' is not enough to turn fact into opinion, where what is supposedly `thought' is, or implies, a proposition of fact." (23)

      The question becomes: Under what circumstances will a statement, however unflattering, find refuge under cover of opinion? Because libel cases are almost invariably fact-intensive, a satisfying answer is difficult to come by. One federal judge has ventured that a statement takes on the character of opinion "where it involves expressions of personal judgment, especially as the judgments become more vague and subjective in character." (24)

      In effect, courts subscribe to that kernel of wisdom first inspired by bullies and hatched in playgrounds: "Sticks and stones may break my bones, but names will never hurt me." While the adage is a simple one, subsumed under it is an important lesson: Corporate managers must recognize the difference between the truly pestilent and the merely vulgar and indecorous--the stuff that batters big egos, rather than big profits. Legal action properly presents itself as an option only with respect to the former genus of online opprobrium.

      (ii) Parody

      Satire is everywhere, and perhaps due in part to its prevalence, it frequently lies outside the bounds of actionable defamation. "There is no libel," according to one appellate court, where the "material is susceptible of only non-defamatory meaning and is clearly understood...