Protecting Your Business from Defamation

Consumer review based websites like Yelp have grown in popularity and power. Consumer voices are often trusted, and a bad online review can have costly consequences. However, online anonymity has led to abuse, and if someone has posted an online review about your business that is false there may be legal recourse for your injuries.

Defamation is an action brought to defend reputation. It involves intentional publication of false, defamatory, and unprivileged information that has a tendency to injure or cause special damage.

One recent case involving defamation claims, mLogica, Inc., et al., v. Pankaj Karan, CA Super. Ct. No. 30-2010-00342873 (December 30, 2013), shows how defamation for online activity works.  Two companies entered into a contract for the creation of some custom software. The party purchasing the software posted numerous negative reviews about the other company on its blog, and emailed its business partners and customers alleging that the software was delivered late and that the company employees were “swindlers” who “milked many of their clients of money and time.” The emails were very damaging to the company’s reputation in the industry, caused many projects to be cut, and a resulted in a significant loss of income.

While truth is an insurmountable defense in defamation actions,  the software company was able to show at trial that the software was fully functional and delivered on time. Furthermore, at trial, the defendant could not identify one unpaid vendor or defrauded customer.

A jury in Orange County, California awarded $1.23 million  to the software company for the damage to its reputation. The decision and verdict were affirmed on appeal.  In fact, the appellate court believed that the evidence supported damages of  “about $10 million. Maybe more.”

This case shows that there is a balance between preventing people from being critical on the Internet, and limiting false speech that does not promote the “marketplace of ideas.”

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with any business dispute concerns you may have.

Enforcing Arbitration Provisions

Many contracts between businesses contain arbitration provisions, where the parties agree that if a dispute should arise, it will be resolved through arbitration. Sometimes when disputes arise, one party will not want to go before an arbitrator or will disagree that the type of conflict is one bound by the arbitration provision. Whatever the reason may be, there are laws that guide whether the contract provision should be followed and enforced.

Whether There Should be Any Arbitration

If one party does not want to submit a dispute to arbitration, the other party may petition the court to compel arbitration under the agreement. The court will then decide whether one of the following applies:

  • whether there is an agreement to submit the dispute to arbitration;
  • whether there are any valid defenses to the enforcement of the arbitration provision; and
  • whether the arbitration provision is enforceable.

If one party opposes arbitration but the other party does not take steps to compel the arbitration, the right to compel arbitration will be waived.

Except in certain very limited circumstances, a person who was not a party to a contract containing an arbitration clause cannot be compelled to participate in arbitration.

An arbitration clause is likely to be found invalid if there was fraud in the inducement of the overall contract or if enforcement of the arbitration clause would be unconscionable.

Which Claims Are Covered by Arbitration Provisions

Courts are often also asked to decide which claims are covered by arbitration and which are not. To make this determination, a court will identify the issue and then determine whether it is within the scope of the contractual arbitration clause.

Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. Contact us at (310) 277-7747 to see how we can help you with any business dispute concerns you may have.

Alternative Dispute Resolution

The legal conflicts that businesses most often face are contract disputes, financial disputes, and employer-employee issues. If your business is facing such a conflict, it will be encouraging for you to know that most of these disputes can and are resolved without going to court. Alternative dispute resolution (“ADR”) can save your business a lot of time and money if you utilize it as a means to resolving your legal issues. There are many kinds of ADR, but the most commonly used are negotiations, mediations, and arbitrations.

In a negotiation, the parties involved in the dispute, or their attorneys, communicate directly with each other to try reaching a mutually agreeable resolution.

In mediation, a neutral third-party (the mediator) serves as a middleman in a confidential process. Each party spends time alone with the mediator engaged in a discussion aimed at finding a way to resolve the conflict. The mediator switches between the parties communicating possible resolutions until an agreement is made. A mediator generally does not have the power to decide the case if an agreement is not reached.

In arbitration, a neutral arbitrator is the one that makes the final decision after reviewing presentations from both sides. The presentations usually include documents and witness testimony related to the dispute. If the arbitration was set up by a court, the arbitrator’s decision may be binding, meaning that the case will not proceed to trial. If the arbitrator’s decision is non-binding, however, the parties will still have the option to take their case to trial.

Alternative Dispute Resolution can be used instead of filing a lawsuit, or if a lawsuit has been filed, it can help avoid trial. Unless mandated by a court, the parties can usually pick which type of alternative dispute resolution to pursue. In addition to resolving a dispute faster than is possible in court, alternative dispute resolution has many other benefits. It is often less costly and time intensive, it is usually confidential, and it can help preserve relationships through better communication.