Internet Lawyer Blog

The United States Bankruptcy Court required additional information from the trustee in the winding down of MF Global, to determine whether the trustee has a conflict of interest. In the case, the bankruptcy trustee has been accused of having a conflict because of prior work done for JPMorgan Chase & Co, which was one of the key lenders to MF Global. However, the trustee's law firm disclosed that it was hired by JPMorgan sometime between 2009 and 2010, and that the related income was less than 1/10 of 1% of the law firm's annual revenue.

In the legal profession, conflicts of interest are not uncommon. However, a bankruptcy trustee should be careful not to engage in conduct constituting conflict of interest with any of the bankruptcy debtors or businesses that file for bankruptcy. A conflict of interest can be a financial interest in any creditor or business of a bankruptcy or even knowing a bankruptcy debtor filing for bankruptcy. It is unethical for a bankruptcy trustee to administer a bankruptcy estate if he has a personal interest in the outcome of the bankruptcy case.

A trustee must be knowledgeable of all applicable laws, including, but not limited to, 11 USC § 701(a)(1), § 101(14), and § 101(31), and must decline any appointment in which the trustee has a conflict of interest or lacks disinterestedness. A trustee should a procedure to screen new cases for possible conflicts of interest or lack of disinterestedness when he or she is appointment.

If a trustee discovers a conflict of interest or a lack of disinterestedness after accepting the appointment, the trustee should immediately file a notice of resignation in the case. Generally, conflict waivers by either the debtor or creditor are not effective to prevent the trustee's duty to resign.

The U.S. Supreme Court has declined to hear a bankruptcy case in which a lender had contended that it did not violate the automatic stay in bankruptcy when it exercised its rights under the Real Estate Settlement Procedures Act ("RESPA") and reanalyzed a debtor couple's escrow account to determine how much money the couple needed to deposit to cover taxes assessed after they had filed their bankruptcy petition (Countrywide Home Loans Inc. v. Francisco Rodriguez, No. 10-1285, Chapter 13, U.S. Sup.; See 7/6/11).

After Francisco and Anna Rodriguez filed for Chapter 13 bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey, the couple filed an adversary complaint against their lender, Countrywide Home Loans Inc., contending that it had violated the automatic stay by requiring them to deposit more money into their escrow account.

Steven J. Baum, P.C. was dropped by Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, from their list of law firms eligible to handle foreclosures.

Fannie Mae said that, "After Nov. 15, 2011, servicers may not refer any new Fannie Mae foreclosure or bankruptcy cases in New York to Steven J. Baum PC..."

On November 10, 2011, Freddie Mac announced its ban. So, both companies said the Baum firm would continue to work on matters referred before the effective dates. Neither said why the firm was being suspended.

Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York state, agreed to pay the United States approximately $2 million so to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn't constitute a finding of wrongdoing.

It seems that such non-compliances truly burden the homeowners the most because they are the ones that have to ultimately face eviction. The lenders will recover losses from the TARP funds or mortgage insurance if applicable.

Click here to read on how to avoid foreclosure.

The bankruptcy filing by Jefferson County that includes Birmingham is the largest ever municipal bankruptcy. According to sources, county commissioners decided to declare bankruptcy because creditors balked at economic concessions outlined in a September deal.

The county is facing $4.23 billion in debt, according to the Birmingham News. The largest creditor, JPMorgan Chase & Co., owns about $1 billion of the county's $3.14 billion in sewer construction bonds. Reuters says the sewer bonds had soured in the mid-2000s amid corruption that led to bribery and fraud charges.

The county, listed assets and debt of more than $1 billion in Chapter 9 bankruptcy petition filed on November 9, 2011 in U.S. Bankruptcy Court in Birmingham.

The threat of bankruptcy has loomed over the county for more than three years and inspired provisions in the federal Dodd-Frank law seeking to protect localities from complex financial trades involving derivatives.

If you use email in your day-to-day business operations the CAN-SPAM Act is a law that sets the rules for commercial email. It also establishes the requirements for commercial messages, provides recipients the right to have the sender stop emailing them, and mentions the penalties for related violations.

The CAN-SPAM Act applies to bulk email and all commercial messages, which the law defines as "any electronic mail message the primary purpose of which is the commercial advertisement or promotion of a commercial product or service," including email that promotes content on commercial websites. The law makes no exception for business-to-business email which means all email. As an example, a message to former customers announcing a new product line is required to comply with the law.

Each violation of the CAN-SPAM Act is subject to penalties of up to $16,000. Here are the CAN-SPAM Act's main requirements:

1. Do not utilize false or misleading header information. Your "From," "To," "Reply-To," and routing information - including the originating domain name and email address - should be accurate and identify the person or business who initiated the message.

2. Do not utilize deceptive subject lines. Stated otherwise, the subject line must accurately reflect the content of the message.

3. Always identify the message as an advertisement. Generally, the law provides some freedom on how to do this, but you must disclose clearly and conspicuously that your message is an advertisement.

4. Inform the recipients of your location. In sum, the email message must include your valid physical postal address. This can be your current street address, a post office box you've registered with the U.S. Postal Service, or a private mailbox you've registered with a commercial mail receiving agency established under Postal Service regulations.

5. Inform the recipients about opt-out options related to future emails. The email must include a clear and conspicuous explanation of how the recipient can opt out of getting email in the future. Make sure your spam filter doesn't block these opt-out requests.

6. Always honor opt-out requests promptly. Any opt-out mechanism you offer must be able to process opt-out requests for at least 30 days after you send your message. You must honor a recipient's opt-out request within 10 business days.

7. Always monitor what others are doing on your behalf. The law is clear that even if you hire another company to handle your email marketing, you cannot contract away your legal responsibility to comply with the law. Generally, both the company whose product is promoted and the company that actually sends the message can be legally responsible for any discrepancies.

Click here or on this link for more information.

Our blog readers should know that there may be alternatives to chapter 7 relief. For example, debtors who are engaged in business, including corporations, partnerships, and sole proprietorships, may be able to remain in business and avoid liquidation (i.e., the sale of a debtor's nonexempt property and the distribution of the proceeds to creditors). If so, then you should consider filing a bankruptcy petition under chapter 11 of the Bankruptcy Code. In a chapter 11, a debtor may seek an adjustment of debts, either by reducing the debt or by extending the time for repayment, or may seek a more comprehensive reorganization. Also, sole proprietorships may qualify for relief under chapter 13 of the Bankruptcy Code. The sole proprietorship is the oldest, most common, and simplest form of business organization. It is a business entity owned and managed by one person. It can be organized very informally, is not subject to much federal or state regulation, and is relatively simple to manage and control. The prevalent characteristic of a sole proprietorship is that the owner is inseparable from the business. Because they are the same entity, the owner of a sole proprietorship has complete control over the business, its operations, and is financially and legally responsible for all debts and legal actions against the business. Another aspect of the "same entity" aspect is that taxes on a sole proprietorship are determined at the personal income tax rate of the owner. In other words, a sole proprietorship does not pay taxes separately from the owner.

Another alternative to filing bankruptcy may be (i) out-of-court agreements with creditors; or (ii) debt counseling services. Our readers should contact a law firm that is experienced in negotiating with creditors in reducing debts.

Please click here to contact us for a free consultation.

It seems that more homes in the United States are facing foreclosure but it is taking lenders more time to sell or repossess the properties due to the high volume. Recent statistics provided by RealtyTrac, Inc. shows that the number of homes which received a first-time notice of default during the third quarter (July-September) increased approximately 14% when compared to the second quarter of this year.

This increase shows that lenders are becoming more aggressive against borrowers who are behind on their mortgages. This means that U.S. homeowners could now face the drastic measures of eviction or filing for bankruptcy to keep some of their properties and obtain a discharge if certain qualifications are met. Still, the banks need to clear backlogs due to certain industrywide foreclosure processing problems (e.g., sloppy mortgage paperwork comprising several shortcuts known collectively as "robo-signing").

Several of our country's largest banks took measures to temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

The foreclosure process takes a long time. Notwithstanding the fact that some lenders seem more willing to begin the foreclosure process on borrowers, they still have not put a dent in the overall length of the foreclosure process. For example, in the third quarter it took an average of 336 days, or 11.2 months, for a U.S. home to go from receiving an initial notice of default to being foreclosed by a lender.

In other states, the process took even longer. For example, in New York it took an average of 986 days (almost 3 years) for the foreclosure process to finalize in the third quarter, which is the longest stretch of any state.

Our readers should realize that they may have options to stop or prevent foreclosures under certain conditions. For an assessment of your situation, please contact us to setup an appointment.

Bankruptcy filings continue with their decrease for the first half of year 2011. However, this does not mean that our economy is getting better. In fact, the decrease in consumer bankruptcy filings, may show that unemployed individuals are too broke to file.

Based on recent statistics, it shows that bankruptcy filings fell by 8 percent in the first six months of 2011 compared to the first six months of 2010. Some experts contend that if we see an increase in bankruptcy filings, it may be a sign that our economy is improving. Approximately 15 million in America are currently unemployed and probably need to max-out their debts in order to survive the recession. See the United States Department of Labor Bureau of Labor Statistics. As such, they may be holding off on filing for bankruptcy until they secure employment. Another expert believes that people tend to file when they return to work to have a fresh start which is one of the benefits of filing for bankruptcy.

There are several different options for filing a bankruptcy petition which is an application by a debtor (or his/her creditors) to a court to declare the debtor bankrupt. This depends on the debtor's financial status and ultimate goal. For example, Chapter 7 is the liquidation chapter of the Bankruptcy Code. Chapter 7 cases are commonly referred to as "straight bankruptcy" or "liquidation" cases, and may be filed by an individual, corporation or a partnership. Under Chapter 7, a Trustee is appointed to collect and sell all nonexempt property and to use any proceeds to pay creditors. In the case of an individual, the debtor is allowed to claim certain property as exempt. Chapter 7 individuals may receive a discharge, which means that the debtor does not have to pay certain types of debts. Corporations and partnerships do not receive discharges. Consequently, any individuals legally liable for the partnership's or corporation's debts will remain liable. Therefore, individual bankruptcies may be necessary as well as the corporation or partnership bankruptcy. Part of the debtor's property may be subject to liens and mortgages that pledge the property to other creditors. In addition, the Bankruptcy Code will allow the debtor to keep certain "exempt" property; but a trustee will liquidate the debtor's remaining assets. Accordingly, potential debtors should realize that the filing of a petition under chapter 7 may result in the loss of property.

In addition, Chapter 13 is the debt repayment chapter for individuals with regular income whose debts do not exceed $1,441,875. Any individual, even if self-employed or operating an unincorporated business, is eligible for chapter 13 relief as long as the individual's unsecured debts are less than $360,475 and secured debts are less than $1,081,400. See 11 U.S.C. § 109(e). These amounts are adjusted periodically to reflect changes in the consumer price index. This chapter is not available to corporations or partnerships.

Chapter 13 generally permits individuals to keep their property by repaying creditors out of future income. Chapter 13 debtor proposes a Repayment Plan which must be approved by the Court. The amounts set forth in the Plan must be paid to the Chapter 13 Trustee who distributes the funds for a small fee. Many debts that cannot be discharged can still be paid over time in a Chapter 13 Plan. After completion of payments under the Plan, Chapter 13 Debtors receive a discharge of most debts.

Chapter 13 offers individuals a number of advantages over liquidation under chapter 7. Perhaps most significantly, chapter 13 offers individuals an opportunity to save their homes from foreclosure. By filing under this chapter, individuals can stop foreclosure proceedings and may cure delinquent mortgage payments over time. Click here for more information about bankruptcy.

Be as it may, no one can deny the fact that the global economy, including, but not limited to, America's current financial status is in dire straits. Therefore, it is important to learn the ways to avoid a personal financial crisis before it happens. Please contact us for a free consultation.

Click here if you want to research bankruptcy statistics by type (i.e., chapter of the bankruptcy code) and the rate per 1,000 population.

In light of the circumstances, numerous states have enacted "cyberstalking" or cyberharassment" laws or currently possess laws that specifically include electronic forms of communication within more traditional stalking or harassment laws. In addition, many states have enacted "cyberbullying" laws in reaction to issues related to protecting minors from online bullying or harassment.

Cyberstalking constitutes use of the world-wide-web (i.e., the Internet), electronic mail or other electronic communications to stalk. It generally refers to a pattern of threatening or malicious behaviors. It may be considered the most dangerous of the three types of Internet harassment, based on a posing credible threat of harm. Penalties range from misdemeanor to felony. See Cal. Civil Code § 1708.7, Cal. Penal Code § 646.9.

Cyberharassment is different from cyberstalking since it may not involve a credible threat. It usually pertains to threatening or harassing email messages, instant messages, or to blog entries or websites dedicated solely to tormenting a person. Some state legislatures have dealt with this issue by inserting provisions which address electronic communications in general harassment statutes, while others have created stand-alone cyberharassment statutes. See Cal. Penal Code §§ 422, 653.2, and 653m.

However, cyberbullying and cyberharassment are used interchangeably sometimes. Generally, cyberbullying is used for electronic harassment or bullying amongst minors in the context of schools. Recent legislation seems to show a trend of placing the burden of enforcement of such policies on school districts. Hence, the laws establish the infrastructure for schools to handle this issue by amending pre-existing school anti-bullying policies to include cyberbullying or electronic harassment among children in educational environments. Most state laws enforce sanctions for cyberbullying on school property, school buses, or school functions. See Cal. Ed. Code §§ 32261, 32265, 32270, and 48900.

Samsung Electronics, the second largest maker of mobile phones, claims that Apple Inc. has infringed upon its patents since entering the mobile-phone market with the iPhone 3G, a lawyer for Samsung told a Dutch court as the Korean company seeks a ban on some Apple products in the Netherlands.

"Apple just entered the market in 2008 without taking care of the licenses," Bas Berghuis van Woortman, a lawyer for Simmons & Simmons LLP who represents Samsung, said in The Hague court. "Apple is consciously, structurally infringing the 3G patents."

The parties will be discussing settlement soon as this is yet another legal battle between two technology giants over intellectual property rights.

In the recent years, numerous Internet forums (aka "online message boards") have provided a place for Internet users to discuss issues, entities/companies, and persons or individuals, who are often disguised in some form of anonymity. Sometimes, the targets of disparaging comments react by filing lawsuits in state or federal courts against unidentified ("John Doe") defendants for claims such as violation of securities laws, breach of confidentiality agreement, and libel. Generally, in such disputes subpoenas are submitted to the message board hosts so to identify the authors. Notwithstanding the various challenges, the courts differ in their treatment of such subpoenas.

For example, see Jon Hart & Michael Rothberg, Anonymous Internet Postings Pit Free Speech Against Accountability, WSJ.com (March 6, 2002).

In Mobilisa, Inc. v. Doe, 170 P.3d 712 (Ariz. Ct. App. 2007) Mobilisa, a communications company, filed a complaint against numerous "John Doe" defendants who had submitted an anonymous e-mail to Mobilisa's management team about the company's founder and CFO's conducts. Thereafter, Mobilisa attempted to compel The Suggestion Box, which was the service provider through which the e-mail was submitted, so to obtain the person's identity who had submitted the e-mail. The trial court granted Mobilisa's request and ordered The Suggestion Box to reveal the identities of the anonymous senders. Thereafter, The Suggestion Box and the senders of the e-mail appealed the trial court's decision.

The Arizona court of appeals ruled that a court considering a request to require disclosure of the identity of an anonymous speaker must consider three factors: (1) whether the defendant was given adequate notice and opportunity to respond to the request, (2) whether the plaintiff's cause of action can survive a motion for summary judgment on elements not dependent on the speaker's identity, and (3) whether a balance of the competing interests weighs in favor of disclosure. Because the trial court considered only the first two factors, the court remanded the case to the trial court to consider the third factor.

Also, in Columbia Insurance Co. v. Seescandy.com, 185 F.R.D. 573 (N.D. Cal.1999), plaintiff attempted to sue anonymous defendants for registering the plaintiff's trademark as the defendants' domain name. The court would not issue a temporary restraining order against the defendants until they were properly served with the complaint, which required the plaintiff to identify the anonymous defendants. Balancing the public interest in providing injured parties with a forum to seek redress for grievances against the legitimate and valuable right to participate in online forums anonymously, the court formulated a four-part test for deciding when to permit discovery to uncover the identity of an anonymous defendant before a complaint has been served.

The district court held that plaintiff must: (1) identify the anonymous defendant with sufficient specificity to allow the court to determine that the defendant is a real person or entity that could be sued in federal court; (2) identify all previous steps taken to locate the elusive defendant; (3) establish to the court's satisfaction that the plaintiff's suit against the defendant has sufficient merit to withstand a motion to dismiss; and (4) file a request for discovery with the court, along with a statement of reasons justifying the specific discovery requested, and must identify a limited number of persons or entities from which the plaintiff could take discovery that might lead to identifying information making service of process on the defendant possible.

As readers can see, a claimant who is seeking to discover the identity of an anonymous Internet user and seek damages, must prove several elements. Please contact us if you have any questions or concerns relating to this topic.

Pursuant to Section 230 of the Communications Decency Act, no provider of an interactive computer service may be treated as the publisher of information provided by another information content provider. See 47 U.S.C. § 230(c)(1). The term "interactive computer service" means any information service, system, or access software provider that provides or enables computer access by multiple users to a computer server, including specifically a service or system that provides access to the Internet and such systems operated or services offered by libraries or educational institutions.

Generally, holding a website operator as the publisher of an allegedly libelous statement by a third party violates the Act. See Zeran v. America Online, Inc., 129 F.3d 327 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998). Accordingly, the standard pursuant to Zeran is that when an online service provider receives a retraction demand regarding statements the service provider did not write, the demanding party should be re-directed to the third-party originator (i.e., the person who originally wrote the defamatory statement).

California's Retraction Statute under Cal. Civ. Code § 48a states that:

1. In any action for damages for the publication of a libel in a newspaper, or of a slander by radio broadcast, plaintiff shall recover no more than special damages unless a correction be demanded and be not published or broadcast, as hereinafter provided. Plaintiff shall serve upon the publisher, at the place of publication or broadcaster at the place of broadcast, a written notice specifying the statements claimed to be libelous and demanding that the same be corrected. Said notice and demand must be served within 20 days after knowledge of the publication or broadcast of the statements claimed
to be libelous.

2. If a correction be demanded within said period and be not published or broadcast in substantially as conspicuous a manner in said newspaper or on said broadcasting station as were the statements claimed to be libelous, in a regular issue thereof published or broadcast within three weeks after such service, plaintiff, if he pleads and proves such notice, demand and failure to correct, and if his cause of action be maintained, may recover general, special and exemplary damages; provided that no exemplary damages may be recovered unless the plaintiff shall prove that defendant made the publication or broadcast with actual malice and then only in the discretion of the court or jury, and actual malice shall not be inferred or presumed from the publication or broadcast.

3. A correction published or broadcast in substantially as conspicuous a manner in said newspaper or on said broadcasting station as the statements claimed in the complaint to be libelous, prior to receipt of a demand therefor, shall be of the same force and effect as though such correction had been published or broadcast within three weeks after a demand therefor.

4. As used herein, the terms "general damages," "special damages," "exemplary damages" and "actual malice," are defined as follows:

(a) "General damages" are damages for loss of reputation, shame, mortification and hurt feelings;

(b) "Special damages" are all damages which plaintiff alleges and proves that he has suffered in respect to his property, business, trade, profession or occupation, including such amounts of money as the plaintiff alleges and proves he has expended as a result of the alleged libel, and no other;

(c) "Exemplary damages" are damages which may in the discretion of the court or jury be recovered in addition to general and special damages for the sake of example and by way of punishing a defendant who has made the publication or broadcast with actual malice;

(d) "Actual malice" is that state of mind arising from hatred or ill will toward the plaintiff; provided, however, that such a state of mind occasioned by a good faith belief on the part of the defendant in the truth of the libelous publication or broadcast at the time it is published or broadcast shall not constitute actual malice.

A defamatory statement is one that injures the reputation of another. The common-law torts of libel and slander punish the publication of statements that are both defamatory and false. Generally, a libelous statement is a false and defamatory statement published in writing. A slanderous statement is a false and defamatory statement expressed orally. False and defamatory oral statements broadcasted over the radio or television are now widely considered libel, rather than slander. In some cases, money damages may be awarded to compensate the victim of libel or slander for the reputational injury caused by publication of the false and defamatory statement.

However, in recent years there has been significant tension between the common-law protections of reputation and the mandate of the First Amendment to the Constitution that "Congress shall make no law . . . abridging the freedom of speech, or of the press. . . ."

To ensure that debate on public issues remains "uninhibited, robust and wide-open," New York Times v. Sullivan, 376 U.S. 254, 270 (1964), the United States Supreme Court has found that the First Amendment limits the circumstances under which a speaker or publisher may be punished for making false and defamatory statements: "Neither lies nor false communications serve the ends of the First Amendment . . . [b]ut to insure the ascertainment and publication of the truth about public affairs, it is essential that the First Amendment protect some erroneous publications as well as true ones." St. Amant v. Thompson, 390 U.S. 727, 732 (1968).

As such, in order to recover for libel or slander, a plaintiff must establish not only that: (1) defendant published a defamatory statement; (2) statement was made about the plaintiff; and (3) the statement was demonstrably false; but a plaintiff must also prove that the statement was made with "fault."

The degree of fault plaintiff must establish depends on whether the plaintiff is a public official or public figure, or a private figure. A public official or public figure must establish constitutional "actual malice" (i.e., publication with knowledge of falsity or subjective awareness of probable falsity). A private figure need only demonstrate that the wrongdoer/defendant was "at fault" in publishing the false statement at issue and a showing of negligence is sufficient in most states.

For more information see: New York Times Co. v. Sullivan, 376 U.S. 254 (1964); St. Amant v. Thompson, 390 U.S. 727, 732 (1968); Gertz v. Robert Welch, 418 U.S. 323, 347 (1974); Philadelphia Newspapers v. Hepps, 475 U.S. 767, 768 (1986); and Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990).

The issue of online service provider liability comes up often in today's high-tech world. In order to promote free discussion and private investment in the Internet, the United States Congress immunized providers of "interactive computer service[s]" against liability arising out of content provided for publication by any other "information content provider." See Section 230 of the Communications Decency Act of 1996, 47 U.S.C. § 230. This section does not limit the application of intellectual property laws or criminal laws, but it protects Internet service providers and website operators against a broad range of tort, contract, and other claims arising out of content created by third parties.

Section 230(c)(2)(A) states that "[n]o provider or user of an interactive computer service shall be held liable on account of...any action voluntarily taken in good faith to restrict access to or availability of material that the provider or user considers to be obscene, lewd, lascivious, filthy, excessively violent, harassing, or otherwise objectionable, whether or not such material is constitutionally protected."

Section 230(c)(2)(B), provides immunity for "any action taken to enable or make available to information content providers or others the technical means to restrict access to [such material]." The immunity offered under Section 230(c)(2) is also referred to as the "Good Samaritan" protection.

Generally, most courts have applied the protection of Section 230 broadly, ruling that ISPs (e.g., AT&T, TimeWarner, AOL) and those operating websites enjoy immunity from liability. Stated otherwise, as long as the material complained of was written by a third party, rather than an agent or employee of the ISP or website, the ISP or website is immune from liability. In addition, the operator of a website may choose to exercise control over the content of its site by removing or editing content provided by third parties without becoming liable as the "publisher" of the third-party statements.

In 1998, the U.S. Court of Appeals for the Fourth Circuit held that even if a publisher or website is put on notice that it is distributing a libelous statement posted by a third party, it cannot be held liable for failure to remove the statement. The court also held that the scope of Section 230 extends to "any cause of action that would make service providers liable for information originating with a third-party user of the service." See Zeran v. America Online, Inc., 129 F.3d 327, 330 (4th Cir. 1997), cert. denied, 524 U.S. 937 (1998).

In New York Times Co. v. Sullivan, 376 U.S. 254 (1964), the United States Supreme Court ruled that the First Amendment limits common-law defamation claims brought by public officials. The Court held that to recover for publication of a defamatory falsehood, a public official must prove that the challenged statement was "of and concerning" the public official plaintiff, that the statement was false, and that the defendant acted with "actual malice." The Court defined "actual malice" as publication with knowledge that the statement was false or with reckless disregard of whether the statement was false or not.

Later, the Supreme Court extended the standard announced in New York Times Co. v. Sullivan to defamation cases brought by "public figures." Public figures include individuals who voluntarily inject themselves into public controversy, as well as those who are involuntarily thrust into the limelight, even if only with respect to a particular activity or incident.

A private-figure defamation plaintiff can recover damages based on the defendant's negligence (or a more speech-protective standard, under the law of some states). In no instance, however, can a private-figure plaintiff recover damages for defamation without a showing of fault amounting to, at least, negligence. Any lesser standard, the Supreme Court concluded, would unduly burden free speech. Gertz v. Robert Welch, Inc., 418 U.S. 323, 347 (1974). And, at least when the speech relates to an issue of public concern, a private-figure plaintiff must bear the burden of proving falsity; the defendant speaker is not obligated to prove the truth of the challenged statements. Philadelphia Newspapers, Inc. v. Hepps, 475 U.S. 767, 768 (1986).

A defamatory statement is one that injures the reputation of another. The common-law torts of libel and slander punish the publication of statements that are both defamatory and false. Money damages may be awarded to compensate the victim of libel or slander for the reputational injury caused by publication of the false and defamatory statement.

A libelous statement was traditionally a false and defamatory statement published in writing. A slanderous statement is a false and defamatory statement expressed orally. False and defamatory oral statements broadcast over radio or television are now widely considered libel, rather than slander.

Click here to review Sections 44-48 of the California Civil Code.

To reconcile the tension between libel law, which punishes speech, and the First Amendment guarantee of freedom of speech, the Supreme Court has limited the circumstances under which a publisher may be punished for making false and defamatory statements.

A libel plaintiff must prove that the challenged statement is false; the publisher does not have the burden of proving truth.

A plaintiff that is a public official or a public figure can only recover for libel if he/she/it can prove that the defendant published the defamatory statement either with knowledge that the statement was false or with serious subjective doubt about the truth of the statement.

A private figure plaintiff must prove, at a minimum, that the defendant was negligent in publishing the allegedly defamatory falsehood.

Courts have long distinguished among those who publish or republish a defamatory statement, those who deliver or transmit material published by a third party, and those who merely provide facilities used by a third party to publish defamatory material.

"Publishers," such as newspapers, magazines, and broadcasters, control the content of their publications and are, accordingly, held legally responsible for any libelous material they publish.

"Distributors," such as bookstores, libraries, and newsstands, cannot be held liable for a statement contained in the materials they distribute unless they knew or had reason to know of the defamatory statement at issue. Distributors are under no duty to examine the publications that
they offer for sale or distribution to ascertain whether they contain defamatory statements.

Common carriers, such as telephone companies and Internet service providers, which do no more than provide facilities by which third parties may communicate, cannot be held liable for defamatory statements communicated through those facilities unless they have participated in preparing the defamatory material.

Section 230 of the Communications Decency Act immunizes the provider of an "interactive computer service" from being held liable as the publisher or speaker of any information provided by "another information content provider." With only a few exceptions, courts have interpreted Section 230 broadly, immunizing publishers from liability for freelance content, bulletin-board postings, and other third-party content. Also, click here for more information.

No other country enjoys defamation laws that are as speech-protective as those of the United States. A number of U.S. publishers have been sued for libel in foreign jurisdictions based on statements published on their websites, which are accessible worldwide.

Many states have retraction statutes that protect writers and publishers by requiring that a potential libel plaintiff give notice before filing suit to allow the publisher and/or the writer to issue a clarification, correction, or retraction, if warranted. Depending on the state, publishing a retraction that conforms to the statutory requirements can reduce the damages available to the plaintiff or even bar a libel claim completely.

It is not clear that all categories of online "publication" fit within the definitions of such statutes. However, courts have indicated that the closer an online publication is in form and content to a protected "traditional" printed publication, the more likely the online publisher will be protected under the retraction statute. Similarly, the more broadly the statute is written, the more likely "new" media publishers will be able to argue successfully that the statute applies to them.

Courts have ruled that an electronic version of a print original does not constitute "republication." Archived copies of original publications are likewise part of the original publication (and not separate "republications").