Coverage Issues for Social Media Defamation in CGL and HO Policies

Time for a quiz: Which of following hypothetical statements triggers coverage under either a homeowner’s personal liability (HO) policy or a commercial general liability (CGL) policy?

1. Your insured’s college age son tweets: “My 8:00 a.m. organic chemistry professor is hooking up with half of XYZ sorority. There is no way those girls could get out of that class by their looks or their brains.”

2. Your insured posts on her personal blog: “County Commissioner Davis continues to vote against the interests of his constituency. Bribery at its worst!” She is employed by the law firm of the commissioner’s opponent in an upcoming election.

3. The marketing department of your insured, a knee brace manufacturer, publishes product reviews on its Facebook page. One person comments, “Your brace was the first one that worked for me. It’s no wonder Company X came out with the same design last year.” Your insured has a patent on the design.

Statements that defame another person or entity are nothing new. But claims arising from such statements in social media are much more common today. Each of the above scenarios presents a myriad of facts that need to be analyzed in the context of defamation law. A full analysis is well beyond the scope of this brief article, but here we’ll discuss important elements.

Although the particulars of defamation differ from one jurisdiction to the next, they usually consist of four basics: (1) a false statement, (2) that is published or spoken, (3) about an identifiable person or entity, (4) that causes harm. Malice may be required if the defamed person is a public official or figure. Even if the elements of defamation are met, coverage still may be in question. Although you may seek a coverage opinion from counsel, it helps to be conversant on the basic issues when the claim comes across your desk.

Under most HO policies, for coverage to be available there must be an “occurrence” under the policy that results in bodily injury or property damage as a result of some action of the insured. This is no different for a defamation claim. An occurrence is most often equated with an accident but can be expanded to include “continuous or repeated exposure to substantially the same harmful conditions.” Generally, a published defamatory statement on the Internet will meet the definition of an occurrence in an HO policy. However, depending on the jurisdiction, some statements may be intentional (not merely negligent) acts and, thus, excluded.

Most policies define bodily injury as bodily or physical harm, sickness, or disease. In defamation cases, there is rarely physical bodily harm, but some jurisdictions do include mental anguish as bodily injury without an accompanying physical injury. Some will even allow mental anguish if the claimant is in the “zone of danger,” even if there is no physical harm. This certainly opens the door to coverage for a defamatory statement that results in mental anguish. Some policies may exclude coverage based on the expected or intended injury exclusion.

HO policies generally define property damage as physical damage to tangible property or the loss of the use of that property when it is not harmed. At first it seems that property damage from a defamatory statement is impossible. But what if, in the first example above, the boyfriend of one of the students keyed the professor’s car because he suspected the statement to be true? Is that property damage covered?

Many HO policies will exclude coverage for intentional or reckless acts. This is important in the case of a public official noted in the second example. Malice is required to defame a person who is deemed to be a public official. Is a statement made with malice reckless? Black’s Law Dictionary begins its definition of malice as “the intentional doing of a wrongful act without just cause or excuse….” In addition to jurisdictional law, you need to know your policy’s section on coverage for intentional or reckless conduct as well as the definitions of “malice” and “public figure.”

In CGL policies, the analysis is similar for claims alleging bodily injury or property damage. However, CGL policies also provide coverage for personal and advertising injury—“Coverage B” in most policies. In addition, a coverage analysis must also determine whether the offender made the statement in the line and scope of the employment. If not, then coverage is not likely under a CGL policy. A savvy plaintiff’s lawyer will draft the complaint such that CGL coverage is triggered by the allegations.

A typical CGL policy defines advertising as “a notice that is broadcast or published to the general public or specific market segment about your goods, products, or services for the purpose of attracting customers or supporters.” Courts have frequently and recently interpreted “advertising injury” and its application to certain claims of defamation. It should be mentioned that for coverage to be triggered under this section, the statement must be made as part of the advertising activity of the business. In the third example, a non-employee made the comment, but a question arises as to whether it was published by the insured and whether that publication was part of the advertising activity of the company.

CGL policies may also provide coverage for online defamation that constitutes invasion of privacy—often described as public disclosure of private facts—or disparagement of another’s products and/or services. In addition, coverage may need to be scrutinized in umbrella policies or under specialty coverage or additional endorsements.

In summary, coverage under HO policies requires a fairly straightforward analysis, but the answer to the coverage question may depend heavily on jurisdictional law. Coverage under CGL policies can be more complicated and involve numerous legal theories and jurisdiction questions. However, in the end, the analysis of a claim for defamation in social media applies the same law that is used in the “offline” context. The only difference is that social media makes it much easier to make a defamatory statement, whether intentional or not. Coupled with the current careless and casual nature in which most people make statements in social media, these claims are much more common than in the past.

Jim Pattillo is a partner with Norman Wood Kendrick & Turner, an Alabama-based law firm. He has been a CLM member since 2010, and can be reached at jpattillo@nwkt.com, www.nwkt.com.