The MLM Attorney, Kevin Thompson: The Cease and Desist

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If you’ve been in business for very long, there’s a good chance you’ve received what I call an “eat s%@#” letter from a lawyer. These are commonly referred to as “cease and desist” letters and are designed to serve two functions:

  • Intimidate the other side in an effort to get them to stop doing something; and,
  • Put the other side on notice that if the bad behavior persists, they could get sued.

Cease and desist letters are commonly used by network marketing companies when distributors are raiding the downline.  I’ve sent dozens of these letters to disgruntled distributors on behalf of companies, usually with a bit of discomfort while hoping the information I’m fed is accurate.  This is my litmus test I explain to clients before sending a C&D: if they’re willing to spend the money to sue the other party if the letter is ignored, I’ll send it. Otherwise, I’m not interested in allowing a client to take a gamble with my credentials.  I’m not a fan of sending hollow threats.  When someone sees a C&D on Thompson Burton letterhead, it needs to be known that we follow up, otherwise C&Ds are meaningless.

Negative Online Commentary

Negative online commentary is the cost of doing business. If you’re doing anything meaningful, there’s going to be some skeptical people. And if you’re doing something shady, there’s going to be a lot of skeptical people, some of whom will choose to write an article about you or your business. It’s the nature of the internet. We all have the power to publish content at the push of a few keys. While I have several thoughts on how companies should deal with negative online articles, I’m going to focus instead on what they should NOT do: have their lawyers send Cease and Desist letters.

In all of my years seeing online publishers post negative commentary about companies here and there, I have never once seen an author actually heed the C&D (hey, that rhymes). Troy Dooly gets them. BusinessForHome gets them. And now we can add Oz over at BehindMLM to the list. Oz was recently sent a C&D regarding his review about “BidsForMyMeds.” And what was the result? The article was not pulled down. On the contrary, Oz dedicated another article to the business and made the poor lawyer famous. Unless a company is willing to defend itself publicly on a platform it does not control, it should always lead with a hand shake instead of a handgun. Be proactive instead of reactive. I have yet to see an instance where an online author posts blatant lies about a company or person. In that scenario, it might make sense to throw a punch. In nearly all cases, the authors are providing their opinions. As biased as those opinions might be, they’re still opinions and given broad protections under the First Amendment.

Scope of the First Amendment

When you’re thinking about calling your lawyer to send one of these nasty-grams to an online meanie, it’s important to understand the limits of First Amendment protections. Below, I’ve inserted some notes from one my talks a few years ago with respect to the First Amendment and blogging. Bottom line: save the Cease and Desist for those occasions when the damages are real, you’re justified and you’re fully prepared to go the distance. Otherwise, throw water on the fire instead of gasoline by reaching out human-to-human and engaging in a conversation. Keep your emotions under control.

If you’ve received a C&D, how did you handle it?

Beginning of my notes

DEFAMATION

A statement is defamatory if it “tends to injure the plaintiff’s reputation and expose the plaintiff to public hatred, contempt, ridicule, or degradation.” Phipps v. Clark Oil & Ref. Corp., 408 N.W.2d 569, 573 (Minn. 1987).
The defendant must have known or should have known that the communication was false. The statement must also have been a statement of fact.

Defamation Per se

Some statements are so defamatory that they are considered defamation per se; and the plaintiff need not prove that the statements harmed his reputation. The classic examples of defamation per se are allegations of serious sexual misconduct; allegations of serious criminal misbehavior; or allegations that a person is afflicted with a loathsome disease.

What Constitutes Injury to Reputation?

The plaintiff must establish proof of damage to reputation in order to recover any damages for mental anguish; see Gobin v. Globe Publishing Co., 232 Kan. 1, 649 P.2d 1239, 1244 (1982).

Libel-proof plaintiffs

Some plaintiffs have such poor reputations to begin with, they are considered “libel- proof.” A plaintiff is “libel-proof” when his reputation has been irreparably stained by prior publications. At the point the challenged statements are published, then, plaintiff’s reputation is already so damaged that a plaintiff cannot recover more than nominal damages for subsequent defamatory statements. Marcone v. Penthouse Int’l Magazine for Men, 754 F.2d 1072, 1079 (3rd Cir. 1985).

Defenses to Defamation

Truth is an absolute defense.

If the communication is designed as a parody where a reasonable audience would not confuse it as factual, it is not actionable. Falwell v. Hustler Magazine. In Falwell, the Supreme Court held, “At the heart of the First Amendment is the recognition of the fundamental importance of the free flow of ideas and opinions on matters of public interest and concern. The freedom to speak one’s mind is not only an aspect of individual liberty – and thus a good unto itself – but also is essential to the common quest for truth and the vitality of society as a whole. We have therefore been particularly vigilant to ensure that individual expressions of ideas remain free from governmentally imposed sanctions.”

In the mid-80s, Hustler magazine printed a satirical advertisement talking about Jerry Falwell’s “first time” with liquor. The advertisement was a play on words that made it seem like Jerry was talking about his “first time” with his mother. Since the advertisement was clearly a parody and one where a reasonable audience would know that the statements were not factual, Jerry Falwell lost his lawsuit.

“Actual Malice”

If the Plaintiff is considered a Public Official or Public Figure, they have to prove that the Defendant acted with malicious intent to harm the Plaintiff. It’s an extra element that makes it more difficult for public figures to file suit against their detractors.

What’s a Public Figure/Official

In general, Public Officials are individuals that hold public office while public figures are individuals that are in the forefront of particular issues.

Large, publicly traded companies are typically treated as “public figures” for purposes of First Amendment cases. If a citizen lashes out at Comcast and communicates false statements. Comcast would have the additional burden of proving that the individual acted with malicious intent to harm the company.

Opinion defenses

The First Amendment protects statements of opinion, as distinct from statements of fact, against claims of defamation. A statement is an opinion when:

(1) the statement is genuinely believed; and
(2) that there is a reasonable basis for that belief; and
(3) that the speaker is not aware of any undisclosed facts tending to undermine the accuracy of the statement.

Prefacing a sentence with “in my opinion” is not always the cure. Statements of opinions can be actionable when one of the above factors is absent.

– end notes –

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