A recent decision of the Federal Court1 has sounded a warning to all businesses that use social media as part of their marketing strategy.
In finding that a company that maintained a Facebook fan page was liable for misleading testimonials posted on that page by users of the company’s products, the Federal Court has emphasised that liability for the publication of misleading, deceptive or defamatory words is not limited to the original author of the words.
The case shows that developing an effective online compliance strategy isn’t limited to ensuring that what the business says about itself is correct; ensuring that what others say is correct also needs to be part of the strategy. Equally, the question of how to apply old law to new media is a question that all readers will be familiar with, and the reasoning process adopted by the court in this case provides a very useful example of how to approach that question, whether it arises in the context of pre-publication advice, ongoing compliance, or dispute resolution.
Background
In 2009, the Australian Competition and Consumer Commission (ACCC) took court action against Advanced Allergy Elimination, which subsequently changed its name to Allergy Pathway. The ACCC alleged that Allergy Pathway had made misleading and deceptive statements about the ability of Allergy Pathway to identify, treat and cure allergies. The Federal Court found that misleading and deceptive statements had been made and made a number of remedial orders, including that the court receive from Allergy Pathway (and from its director, Mr Paul Keir) undertakings not to “publish” or “make” any further misleading and deceptive statements2.
In 2010, the ACCC brought further proceedings against Allergy Pathway and Mr Keir, alleging that each was in contempt of court as a result of what was said to be repetition of the misleading and deceptive statements in breach of the undertaking.
Allergy Pathway and Mr Keir admitted that some of their conduct was in breach of the undertakings, including the publication of material on Allergy Pathway’s own website and the publication of that material on Twitter by means of links to Allergy Pathway’s website. However, Allergy Pathway and Mr Keir both disputed that they were liable for testimonials posted by clients of Allergy Pathway (and which replicated certain of the misleading and deceptive statements) on the “wall” of the “fan” page that Allergy Pathway had set up on Facebook.
Had Allergy Pathway and Mr Keir “published” the testimonials on the Facebook “fan” page?
The Federal Court found that Allergy Pathway and Mr Keir had “published” the testimonials, even though they had neither written the testimonials nor posted them on the Facebook “fan” page.
In reaching this finding, Finkelstein J considered liability for publication in the context of the law of defamation. His Honour first considered two cases in which leaflets containing defamatory statements had, respectively, been placed on the bulletin board of a golf club3 and glued to a number of bus shelters4. In those cases, it was held that where defamatory statements were affixed to property, the owner of the property did not become liable merely as a result of knowledge of the statements, and that it was necessary to show that the owners had “consented to, or approved of, or adopted, or promoted, or in some way ratified, the continued presence,” 5 of the defamatory statement.
Justice Finkelstein then turned to consider cases in which these principles had been applied to defamatory statements published on the internet, and summarised the principles in the internet cases as follows (at [30]): “The effect of these cases is that merely facilitating the commission of a wrong will not result in liability but it is another thing to procure or conspire in the commission of the wrong, in which case liability may be imposed, particularly if the procurer is aware of the material being published and has accepted general responsibility for its publication”.
Of course, care must be taken not to treat the law of defamation as the only proper basis from which to construe the meaning of the word “publish”. In the context of a case that turned upon the meaning of the word “publish” in the Racing Administration Act 1998 (NSW), Palmer J has pointed out that: “The law of defamation has loaded the word “publish” with a gloss which would seem bizarre to all but the cognoscenti6 ” . For example, although internal communications (such as those discussing whether offending posts should be moderated or deleted) would involve publication for the purposes of defamation, it would be more difficult to argue that they amounted, of themselves, to a breach of an undertaking such as that given in the present case.
However, in relation to the testimonials, Finkelstein J was satisfied that liability for publication was established by two factors: first, knowledge of the testimonials, and second, the fact that although Allergy Pathway and Mr Keir had the ability to remove the testimonials, they did not do so.
As a result of the breaches of the undertakings, Allergy Pathway and Mr Keir were each fined $7500 for contempt of court, and were also ordered to pay the ACCC’s costs. Extensive orders for corrective advertising were also made, including orders for the publication of corrective advertising on Allergy Pathway’s Facebook and Twitter pages.
Lessons from the case
Although the case concerned an application for punishment of contempt, the lessons of the case are equally applicable whenever there is a risk of liability for the publication of statements, which are misleading or deceptive, or which are defamatory or which breach anti-discrimination legislation (eg, by inciting racial hatred). The risk is greater in industries where regulators are active and, as Allergy Pathway and Mr Keir found out, those who have been the subject of previous regulatory attention need to be particularly careful.
Managing the risk is straightforward — if your business uses social media platforms that allow you to monitor and delete content posted to those platforms by your customers (or by members of the public), those platforms need to be carefully monitored by people with the necessary skills to understand the kinds of statements that are likely to get you into trouble with regulators, competitors or customers. The defamation cases, and the present case, show that it is not necessary for there to be any positive conduct on your part to make you a publisher of the words of another; it is enough that, having the power to delete them, you do not do so. So, keep your friends close —and your Facebook “friends” closer.
Footnotes
1. Australian Competition and Consumer Commission (ACCC) v Allergy Pathway Pty Ltd (No 2) [2011] FCA74; BC201100491.
2. Australian Competition and Consumer Commission (ACCC) v Allergy Pathway Pty Ltd [2009] FCA 960; BC200907920.
3. Byrne v Deane [1937] 2 All ER 204; [1937] 1 KB 818.
4. Urbanchich v Drummoyne Municipal Council (1988) A Def R 50-035; [1991] Aust Torts Reports 81-127; BC8801175.
5. Above note at 69,193 per Hunt J.
6. Tom & Bill Waterhouse Pty Ltd v Racing New South Wales
(2008) 72 NSWLR 577; 188 A Crim R 521; [2008] NSWSC 1013; BC200808489 at [26].
For further information
Angus Macinnis | Senior Associate
T +61 2 8233 9627
